Overnight Developments

• European stocks are slightly higher with the European DJ Stoxx 50 up +0.09% and Sep S&Ps down -0.80 of a point. The dollar index is weaker and copper jumped to a 4-month high on speculation that central banks won’t allow the global economy to slide back into recession after the Bank of Japan (BOJ) expanded a bank-loan program and Fed Chairman Bernanke pledged last Friday to "do all that it can" to ensure a continuation of the economic recovery. European stocks also received a boost after Aug Euro-Zone economic confidence rose a more-than-expected +0.7 to 101.8, its highest level in 2-1/2 years, as a surge in exports help the Euro-Zone economy in Q2 to expand at its fastest pace in 4 years. An increase in M&A activity is another positive factor for stock prices today after Zodiac Aerospace jumped 13% after La Tribune reported that Safran SA is preparing another bid for Europe’s biggest maker of airplane seats, while Genzyme climbed 3.4% after Sano fi-Aventis SA offered to buy the world’s largest maker of medicines for genetic diseases for about $18.5 billion. On the negative side of M&A activity, Infineon Technologies AG, Europe’s second-largest semiconductor maker, slid 1.9% after Intel agreed to buy its wireless unit for about $1.4 billion, below the $1.9 billion Infineon was seeking.
• The Asian markets today closed higher with Japan up +1.76%, Hong Kong +0.68%, China +1.97%, Taiwan +0.24%, Australia +1.89%, Singapore +0.62%, South Korea +1.82%. India +0.19%. Japanese stocks rallied when the BOJ, at the conclusion of its emergency meeting in Tokyo, boosted its bank-loan program by 10 trillion yen ($118 billion) to 30 trillion yen as the yen’s surge to a 15-year high against the dollar threatens economic growth. The yen knee-jerked lower after the BOJ’s action, but soon strengthened on speculation the steps taken by the BOJ are insufficient to stem its strength. Even Prime Minister Kan’s announcement that the government will spend 920 billion yen ($10.8 billion) on economic stimulus and compile an extra budget if needed failed to stem the yen’s gains. Deutsche Bank AG recommends that investors sell Asian stocks before slowing earnings growth and a weakening global economy lead to further stock losses.

Overnight U.S. Stock News

• Sep S&Ps this morning are down -0.80. The stock market last Friday rebounded from an early drop to a 1-1/2 month low and finished sharply higher and on its high (Dow +1.65%, S&P 500 +1.66%, Nasdaq Composite +1.65%). Bullish factors included (1) the smaller-than-expected downward revision to Q2 US GDP (+1.6% annualized versus expectations of +1.4% annualized) as Q2 consumption was revised upward to +2.0% from +1.6%, and (2) comments from Fed Chairman Bernanke, which led a broad-based rally in raw materials and energy producers, when he said the Fed "will do all that it can" to ensure a continuation of the economic recovery and that the "preconditions" for growth in 2011 are "in place."
• Bearish factors included (1) the unexpected decline in the Aug US University of Michigan consumer confidence (-0.7 to 68.9 versus expectations of unchanged at 69.6), and (2) data from EPFR Global that said investors withdrew a net $7.1 billion from equity funds tracked worldwide in the week to Aug 25 and put $5.2 billion into bonds amid concern the economies in Europe and the US are losing momentum.
• Genzyme (GENZ) gained 3.8% in European trading after Sanofi-Aventis offered to buy the company for $18.5 billion in cash or $69 a share, taking its bid public after Genzyme refused to negotiate.

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Loss of Confidence Surrounding the US Fundamentals by Darrell Jobman

EUR/USD Risk appetite faltered in Asian trading on Wednesday and the Euro retreated back towards the 1.31 area against the dollar as confidence in the global economy deteriorated. The US trade deficit for June was sharply worse than expected with a 21-month high of US$49.9bn from a revised US$42…. Day Trader:..>>>   More »

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S&P 500

Today is the 7th trading day of August and the market has held up well however today is the FOMC Announcement so anything can go. After the Nonfarm payrolls fell by 131k last month, traders and investors are looking for the Fed will need to ease policy to stimulate the economy. Some of these measures include the Fed buying Treasuries and postponing any sales of its balance sheet assets. However the concern over deflationary pressures is a concern for the Fed.

According to the Stock Trader’s Almanac, the S&P was up only twice in the last 13 years and the first nine trading days are the weakest of the month. Historically it is the weakest month of all seasons as many institutions, investors, and traders are away during the month of August on vacations before their children go back to school in September.

Beware of rallies as the middle of August seems to be stronger than the beginning and the end according to the Stock Trader’s Almanac. Traders seem to sell before the weekend and follow the direction of the foreign markets after they trade on Monday. China brought the Asia markets lower pushing the dollar higher against all major currencies.

Yesterday the market broke through into the January 2010 resistance level. Last week the markets had a hard time breaking through the 1125 resistance level which begins the January 2010 resistance levels. Whether the markets can hold on to this level is another story only to be determined after the FOMC announcement. Not enough volume is expected during the summer months to push the markets above this level especially during the month of August. However with global economy expecting slowdown foreign economies see safety within the US markets.

On the daily chart of the S&P 500 we were trading between the cushion area of 144 and 200 day moving averages as traders and investors are cautious looking ahead especially with the upcoming mid-term elections, uncertainty with European debt, and the current Gulf Oil Spill. Now we have slowly broke out of this area after the European banks passed the stress tests. However as we have stated before the markets will remain trading below the January 2010 resistance levels which begin at 1125.

The Market Volatility Index (VIX) has been active due to the seasonal selling trend of the ‘Sell in May’ philosophy however seems to stabilizing after the Fourth of July weekend and the anticipation of second quarter 2010 earnings season. Currently the VIX trading below the 144 and 200 day moving averages indicating more risky approach towards investments and assets.

The Chicago Board Options Exchange (CBOE) Market Volatility Index measures options activity within the market and is widely used tracking the S&P 500. A common trading strategy for traders and investors includes a VIX level of 30 or above means an immediate switch from equities to cash. Traders and investors are retreating from the markets and finding safety and protection within the Treasuries, gold, and the dollar when the index is trading above 30.

Summary of Major S&P Pivot Levels

1219: S&P 500 52 Week High

Technical Levels Natural Support and Resistance

1125: January 2010 Resistance Level

1100: Natural Support Level

Technical Levels 15 Minute Chart

1120: 144 Day Fibonacci Moving Average on 5 Minute Chart

1118: 200 Day Moving Average on 5 Minute Chart

Technical Levels Daily Minute Chart

1102: 144 Day Fibonacci Moving Average on Daily Chart

1091: 200 Day Moving Average on Daily Chart

Daily Economic Calendar

FOMC Announcement / 14.15 EST

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- Technical and pivot levels for the S&P and other indices

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Disclaimer

The content in this website is provided for educational and informational purposes only. We offer no investment advice and nothing in this material should be construed as such. There is risk of loss when you invest; past performance is never a guarantee of future performance. Trading is the sole responsibility of the individual. No reader should act on the basis of any matter contained herein without getting appropriate professional advice. Every investor or trader should consider all offerings of products and services on their own merits and for suitability to the individual’s personal needs and circumstances.

All Right Reserved TraderMongers.com © 2010

- About the Author: Shamim Ziyaaudhin is one of the editors of TraderMongers.com a one stop trading news feed source for worldwide traders and investors. Their philosophy is to establish the standard for providing market news feed that is comprehensive, accurate, and concise. Providing technical and fundamental trading setups, economic numbers, and calendar events throughout the trading day. Shamim has a Masters in Business Administration from Fairleigh Dickinson University and holds a degree in Psychology from Rutgers University. Click here to subscribe to Tradermongers Live News Feed Article Source

Overnight Developments

• Global stocks are mostly higher with the European Euro Stoxx 50 Index up +0.45% and Sep S&Ps up +1.20 points. The dollar index is little changed, Treasuries are weaker and most commodities are higher. Rio Tinto rose 3.5% and led mining companies higher as copper rallied after LME copper inventories declined to a 7-1/4 month low. Antofagasta gained 3.4% after Citigroup raised its recommendation for the copper producer to "buy" from "hold." Also helping European stocks was the larger-than-expected +1.7% m/m increase in May French industrial production which was boosted by improving global trade and a pickup in output at car plants, while ECB President Trichet said that while the fiscal crisis isn’t over, the economic signs are "encouraging."
• The Asian markets today closed higher with Japan up +0.52%, Hong Kong +1.64%, China +2.76%, Taiwan +0.50%, Australia +0.91%, Singapore +0.69%, South Korea +1.66%, India +1.03%. Asian stocks were helped higher by Citigroup’s prediction that emerging-market stocks will rally as much as 25% by the end of the year as the global economy avoids a "double dip" recession and attractive valuations lure investors. The South Korean won strengthened over 1% against the dollar after the Bank of Korea unexpectedly raised its 7-day repurchase rate to 2.25% from a record low 2.00%, citing a pre-emptive strike against inflation. South Korea joins India, Malaysia and Taiwan in lifting interest rates in recent weeks, signaling that Asia’s expansion will remain resilient to Europe’s debt crisis.

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Overnight Developments

• Global stocks are sharply higher with the European Euro Stoxx 50 Index up +1.34% at a 1-1/4 month high and Sep S&Ps up +17.10 points at a 1-month high. The dollar index plunged to a 1-1/4 month low, Treasuries sank and commodities surged with gold jumping to an all-time high after China signaled it will relax the yuan’s fixed rate to the dollar, a sign that the global economy may strengthen. European mining stocks and basic resource producers rallied on speculation a stronger yuan will boost Chinese demand for metals and other commodities. European carmakers all gained with Daimler AG and Bayerische Motoren Werke AG both up over 3%, while Porsche SE advanced 4.1% after Commerzbank raised its recommendation on the carmaker to "hold" from "reduce." Banco Santander SA climbed nearly 2% after the Times reported that Spain’s largest bank is considering selling parts of its UK operations that may be worth as much as 25 billion pounds. BP Plc li mited gains in European stocks after it slid nearly 5% after the Sunday Times reported that the company is seeking to raise $50 billion to cover the cost of the oil spill in the Gulf of Mexico. BP may raise the first $10 billion from a bond sale this week, acquire a $20 billion loan and get the remaining $20 billion from asset sales over the next 2 years, the newspaper reported, and that BP wants to move quickly to raise cash because of concern its ratings may be downgraded, which would boost its borrowing costs.
• The Asian markets today closed higher with Japan up +2.43%, Hong Kong +3.08%, China +3.13%, Taiwan +1.90%, Australia +1.33%, Singapore +1.84%, South Korea +1.75%, India +1.74%. Asian stock markets rallied sharply on speculation that China’s relaxing of its currency peg to the dollar will bolster global economic growth. China’s currency posted its biggest gain in 20 months as the yuan surged to 6.798 per dollar after being held at about 6.83 to the dollar since mid-2008. In a statement on its website, the PBOC said the decision to increase "exchange-rate flexibility" was made after the economy improved, but did not indicate a timeframe for the change. The PBOC said it would maintain the yuan’s 0.5% daily trading band and said greater yuan flexibility would help cut the trade surplus and reduce reliance on exports as a driver of growth. In a tactical move ahead of this weekend’s Jun 26-27 G-20 summit in Toronto, China is trying to shift the focus of the G-20 meeting away from the value of its currency to items on its own agenda. Vice Foreign Minister Tiankai said that China wanted to discuss new quotas for the IMF that would boost the power of developing countries, promote the overhaul of global financial regulations, speak out against trade protectionism and pay more attention to economic development in poorer countries.

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Overnight Developments

• Global stocks are higher with the European Euro Stoxx 50 Index up +1.01% and Sep S&Ps up +1.30 points. The dollar is little changed, Treasuries are stronger and commodities are mixed. European bank stocks gained, led by a 8% surge in Banco Santander SA, after Spain’s biggest lender said its outlook is “brilliant” and that is can benefit from rivals’ “weakness” in mature markets. Novartis gained 3.4% after winning a US regulatory advisory panel’s backing to introduce the first pill to treat multiple sclerosis with its drug Gilenia. Continental AG rose 3.8% after Europe’s second-biggest tire maker was raised to “buy” from “hold” at Deutsche Bank AG, while BP gained 8.7% as it snapped 4 days of declines that saw its stock tumble to a 13 year low, after the WSJ reported the company is considering cutting or deferring its Q2 dividend payment. Also boosting European stocks today was the action by the Bundesbank to raise its g rowth forecasts for Germany, as it now predicts GDP growth of 1.9% this year and 1.4% in 2011, higher than a Dec prediction of 1.6% growth in 2010 and 1.2% for 2011 as the economy profits from a pick-up in global demand. 
• The Asian markets today closed higher with Japan up +1.70%, Hong Kong +1.22%, China +0.32%, Taiwan +1.64%, Australia +1.58%, Singapore +0.60%, South Korea +1.62%, India +0.84%. Asian stock markets rallied after several economic reports from China showed its economy continues to strengthen. May China retail sales surged +18.7% y/y and May industrial production climbed 16.5% y/y as the Chinese economy proves resilient so far to the European debt crisis. Computer-related companies closed higher after Acer, the world’s largest vendor of laptop computers, rallied over 3% higher when it reported a 45% jump in May sales and Taiwan Semiconductor Manufacturing, the biggest maker of custom chips, said that it’s optimistic about the chip industry and the global economy for the second half of 2010. This adds to bullishness in the technology sector after the Semiconductor Industry Association said that global sales of microchips will rise 28% to $290.5 billion this year, boosted by demand in China and India, compared with a Nov forecast of 10% growth.

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Understanding the direction of the market as well as the economic activity will lead to profitable trades. Keep up with our live news feed with TraderMongers.com!

S&P 500

Fear overseas is playing apart during today’s trading. Greece debt and the bailout offered are presenting questionable actions on whether the play will help the euro. China’s real estate bubble and the falling price of copper are indicating fears of deflation rising throughout the global economy.

The S&P 500 index finished just below the natural support level of 1175. The index met resistance due to Monday’s previous high as well as the convergence of the 144 and 200 day moving averages on the 5 minute chart. The S&P 500 index should be trading below the 1190 Monday’s resistance. An upward breakout could possible push the towards the 1110 area.

Looking at the daily chart of the S&P 500 index, its still trading below January 2010 resistance level as well as the 144 day moving average of 1117. Expect the market to be range bound between 1175 and 1110 as we head towards the slow summer months.

The Chicago Board Options Exchange (CBOE) Market Volatility index (VIX) measures options activity within the market and is widely used tracking the S&P 500. Increasing volatility implies pessimism within the market and stocks sell off as traders seek protection for their assets.

A common trading strategy for traders and investors includes a VIX level of 30 or above means an immediate switch from equities to cash. Currently the VIX is above the 144 and 200 day moving averages on the daily chart. Traders and investors are retreating from the markets and finding safety and protection within the dollar. As long as we stay above this level expect pessimism as we approach the slow summer months.

Summary of Pivot and Technical Levels

1219: S&P 500 52 Week High

1117: 144 Day Fibonacci Moving Average on Daily Chart

1110: Natural Resistance Level

1190: Monday’s Previous High

1086: 144 Day Fibonacci Moving Average on 5 Minute Chart

1084: 200 Day Fibonacci Moving Average on 5 Minute Chart

1085: 200 Day Fibonacci Moving Average on Daily Chart

1175: Natural Support Level

Tuesday Economic Calendar

Consumer Confidence / 10.00 EST

Ben Bernanke Speaks / 20.30 EST

Disclaimer

The content in this website is provided for educational and informational purposes only. We offer no investment advice and nothing in this material should be construed as such. There is risk of loss when you invest; past performance is never a guarantee of future performance. Trading is the sole responsibility of the individual. No reader should act on the basis of any matter contained herein without getting appropriate professional advice. Every investor or trader should consider all offerings of products and services on their own merits and for suitability to the individual’s personal needs and circumstances.

- About the Author: Shamim Ziyaaudhin is one of the editors of TraderMongers.com a one stop trading news feed source for worldwide traders and investors. Their philosophy is to establish the standard for providing market news feed that is comprehensive, accurate, and concise. Providing technical and fundamental trading setups, economic numbers, and calendar events throughout the trading day. Shamim has a Masters in Business Administration from Fairleigh Dickinson University and holds a degree in Psychology from Rutgers University. Click here to subscribe to Tradermongers E- News Article Source

Understanding the direction of the market as well as the economic activity will lead you to profitable trades. Keep up with our live news feed and the trend with Tradermongers.com!

S&P 500 Pivots

We have mentioned previously, uncertainty with further regulatory agencies could cool down Wall Street as the result of Goldman Sachs probe. The market is most likely to be weak after the April 15th tax deadline. All the major indexes fell below their natural support levels. Dow Industrials finished off below 11,000, Nasdaq is below 2500, and the S&P 500 is down to 1174 regardless of the positive earnings reported on Tuesday, May 4th.

The S&P 500 broke through three previous lows within the last three days as well as the natural support of 1200. The index paused near the 55 Fibonacci moving average on the 5 minute chart.

Euro traded below $1.30 for the first time since April 2009 due to long term concerns over the Eurozone sovereign debt. The US dollar soared as investors and traders rushed to safety out of the markets. This event is pushing the possibility of the Federal Reserve raising interest rates faster than its European counterparts.

European markets suffering due to various weak countries such as Greece, Portugal, and Spain have also played their part today within bringing a weak global economy. As we approach the seasonal trading strategy of ‘Sell in May and go away’ we expect the market to have a correction or consolidate around the 1200 level before finding direction.

Looking at the market volatility index which has been trending lower since October of 2008 and recently reached a 52 week low of 15.23 – on Monday the index is approaching the 144 and 200 moving averages on the daily chart. The market may be looking to sell off due to the uncertainty of the Goldman Sachs probe leading the way for new financial regulations in the near future as well as the crisis with the European markets. On Tuesday market volatility is currently above the 144 and 200 moving averages on the daily chart and will most like begin to trend higher.

Summary of Pivot Levels:

1219: S&P 500 52 Week High

1208: Friday’s Previous Low

1200: Natural support level

1199: 144 and 200 Moving Averages

1193: Last Thursday’s Previous Low and

55 Fibonacci MA on Daily Chart

Wednesday economic calendar includes: mortgage applications, crude oil report, and ISM Non-manufacturing index.

Disclaimer

The content in this website is provided for educational and informational purposes only. We offer no investment advice, and nothing in this material should be construed as such. There is a risk of loss when you invest; past performance is never a guarantee of future performance. Trading is the sole responsibility of the individual. No reader should act on the basis of any matter contained herein without getting appropriate professional advice. Every investor or trader should consider all advice and all offerings of products and services on their own merits and for suitability to the individual’s personal needs and circumstances.

All Right Reserved TraderMongers.com © 2010

- About the Author: Shamim Ziyaaudhin is one of the editors of TraderMongers.com a one stop trading news feed source for worldwide traders and investors. Their philosophy is to establish the standard for providing market news feed that is comprehensive, accurate, and concise. Providing technical and fundamental trading setups, economic numbers, and calendar events throughout the trading day. Shamim has a Masters in Business Administration from Fairleigh Dickinson University and holds a degree in Psychology from Rutgers University. Click here to subscribe to Tradermongers E- News Article Source