PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

* Factor - the number of ETF shares that are approximately equivalent in notional value to the notional value of one futures contract

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

The March e-mini NDX (NQ) followed through on Thursday’s losses until there was a little over 2 hours left in Friday’s session, as buyers stepped in and it closed 1745, up 10.25 on the day and 34.25 off the low.  NQ oscillated around the 1731.50 level for the first 2 1/2 hours of Friday’s equity session (chart) and then for about an hour it hugged the level before it broke lower.  The decline found support at the 1717.50 level (1710.75 low) and after a pause around 1720, NQ moved past 1731.50 and straight up to the 1744.75 level.  The level then provided resistance over the final hour.  Friday’s reversal formed a hammer (definition, chart) candlestick formation, which requires confirmation to signal a reversal.  Friday’s volume was high, but unlike the mini S&P, NQ did not eclipse the highest volume for the contract from 1/28 (551M vs. 571M).  The idea to take a short position in NQ remains, enter 1/2 just below the 1758 level and another 1/2 below the 1774.50 level with a stop above Thursday’s 1792 high.  Overnight trading tested the 1744.75 level, with NQ back above it.  Support @ 1744.75, 1731.50, 1717.50, 1704.50, 1690.75 and 1670.  Resistance @ 1758, 1764.75, 1774.50, 1788.75, 1804 and 1813.75.

Chart Source: TradeStation

The March E-Mini S&P (ES) continued to sell off Friday and reached 1040.75 before buyers stepped in over the final 2 hours and it closed 1059.75, down 2.  ES crossed below the 1061 level at the start of Friday’s equity session (chart), came within 2 ticks of the 1051.75 level and then retested 1061 all in an hour.  The 1st test 1051.75 came almost 2 hours later and ES held, the 2nd test gave way and it traded down to the 1040.75 low.   The rally over the final 2+ hours paused around 1048 before ES moved past 1051.75 to 1061 and then for the final hour grinded around the level.  Friday’s candlestick formation is called a hammer and it occurred on record volume for the contract (3.98MM vs. 3.54MM on 1/22).  Follow-through today is required to confirm the reversal.  Also, we noticed that cash SPX moved back above the downtrend line (about 1064.2, 1063.5 today) drawn from the October 2007 high after it crossed below on Thursday.  Note that the chart is in semi-log scale (scaled by percentage change vs. net change).  In addition to the trendline, SPX came close to the 10/14/08 high of 1044.31 (1044.50 low), a high we were watching back in September as it was the top tick ahead before SPX declined to 666.79.  How far could a bounce go?  Keep an eye on the 1069.50 and 1084.50 levels.  Has the uptrend resumed?  That’s not the case unless ES can move back above its 50 day average of 1106.8.  Overnight trading has ES near the 1061 level.  Support @ 1051.75, 1036, 1021, 1004.75 and 990.25.  Resistance @ 1061, 1069.50, 1084.50, 1096.25, 1103, 1108 and 1119.25. 

Chart Source: TradeStation

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

* Factor - the number of ETF shares that are approximately equivalent in notional value to the notional value of one futures contract

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

The TICK index (definition, 15 minute chart - Source: TradeStation) has seen persistent selling (< -1000) over the past 3 days and only 1 brief period of buying (> +1000) on Wednesday.  Considering the oversold level of the market, a bounce would catch a lot of sellers on the wrong side.

The March e-mini NDX (NQ) extended its 3 day bounce early yesterday, but once the equity session began, sellers stepped in and NQ reversed the gain for the week.  Yesterday’s low was 1 tick below last week’s 1731.75 low and NQ closed 1734.75, below last week’s lowest close of 1739.25.  NQ tested the 1764.75 level to start yesterday’s equity session and bounced to the 1773.25 high (1792 high on the day) before it reversed lower.  The decline did not pause until NQ was below 1750 and after it moved below the 1744.75 level, it traded in a 9 point range for 3 1/2 hours.  Over the final hour, NQ dipped to test the 1731.50 level (the low) before the close.  The candlestick pattern for this week is called a Falling Three Methods (definition, chart, Source: TradeStation), which is a bearish continuation pattern.  In light of that, we’ll look to take a short position in NQ, but for proper reward:risk on the expectation of reaching the 1690.75 level, it is necessary to enter 1/2 just below the 1758 level and another 1/2 below the 1774.50 level with a stop above yesterday’s 1792 high.  Overnight trading reached 1725.50, with NQ back above the 1731.50 level.  Support @ 1731.50, 1717.50, 1704.50, 1690.75 (new) and 1670 (new).  Resistance @ 1744.75, 1758, 1764.75, 1774.50, 1788.75, 1804 and 1813.75.

The March E-Mini S&P (ES) reversed the gains from Monday and Tuesday and closed 1061.75, below last week’s 1066.50 low, but just above the 1061 level.  ES tested the 1084.50 level for the first 15 minutes of yesterday’s equity session and once it broke, the decline was so powerful that the best bounce it could muster was 5.75 points on the way to a 34.75 point loss.  ES paused a bit at the 1069.50 level midway through the session and after it traded below, was unable to move back above.  In fact, that massive 5.75 point bounce came after ES hit 1063.75 and the top tick was 1069.50 before the final move lower reached 1059.25.  So here we are in the right frame of mind without a position.  Something we noticed that might have helped avert the current penny-wise, pound-foolish situation was the failed retest of the trendline (Source: TradeStation) on the continuous March ES chart.  Tuesday’s high was 1101.50 with the trendline at about 1100 and ES closed 1097.25.  Overnight trading had ES down to 1050.50 and post Employment data, it reached 1051.50.  Let’s see if ES holds the new 1051.75 level today.  Support @ 1051.75 (new), 1036, 1021 (new), 1004.75 (new) and 990.25 (new).  Resistance @ 1061, 1069.50, 1084.50, 1096.25, 1103, 1108 and 1119.25.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

* Factor - the number of ETF shares that are approximately equivalent in notional value to the notional value of one futures contract

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

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The March e-mini NDX (NQ) gained almost 1% yesterday and closed 1785.50 to extend its rally to 3 days, back above the 1774.50 level for the first time since last Wednesday.  Again, the level is the 50% Fibonacci retracement of the range from the 11/3/09 low (1648.75) to the 1/11/10 high (1900).  Yesterday’s equity session opened on the 1764.75 level and trended steadily higher for the entire day into the 1786.50 high.  On the way up, the first 2 moves above the 1774.50 level (1777.75 and 1779.75) were unable to hold the level, but the 3rd move managed to have follow-through.  Not long after overnight trading began, NQ almost reached the 1792.1 initial oversold price (1792 high) on the heels of Cisco’s earnings, but as the night wore on it traded lower.  Post Jobless Claims, NQ moved below the 1774.50 level and remains there (1770.25 low).  Was that the extent of the bounce?  A close below the 1774.50 level would point in that direction.  Keep in mind that Employment data is released tomorrow morning and there could be late day action in preparation for that.  Support @ 1764.75, 1758, 1744.75, 1731.50, 1717.50, 1704.50 and 1695.75.  Resistance @ 1774.50, 1788.75, 1804, 1813.75, 1833, 1843.25 and 1854.

The 2 day bounce in the March E-Mini S&P (ES) ended yesterday as it lost 0.75 points, but the close (1096.50) was above the 1096.25 level again.  ES spent all of yesterday’s equity session in a 9 point range between the 1090.50 low and 1099.50 (1100.25 overnight high), at worst 5.75 below and at best 3.25 above the 1096.25 level.  Over the final 3 hours, bounces in ES up to the level and the 1096.75 initial oversold bounce price were rebuffed.  Are we being too fine by waiting for 1106.1 to initiate the 1/2 short position?  It made us think of the Voltaire quote - “The perfect is the enemy of the good.”  Overnight trading took ES below yesterday’s low and down to 1087.50, with it down about 50 bps at the moment.  Keep in mind that Employment data comes tomorrow morning and we could see action late in the day in anticipation of the numbers.  Support @ 1084.50, 1069.50, 1061, 1045.50 and 1036.  Resistance @ 1096.25, 1103, 1108, 1119.25, 1131.75, 1145 and 1152.25.

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PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

* Factor - the number of ETF shares that are approximately equivalent in notional value to the notional value of one futures contract