Trade Guideline For friday

Massive end of day buy program, continuing into overnight globex session, most likely engineered by the Fed helped pushed the market back into Tuesday's trading range. Whether or not they can hold it up into the open tomorrow, only time will tell, as anything can happen by the time the market opens on Friday. 

But whatever happens, as the market opens on Friday, Key Level is 2550 for NQ 

• Bullish above, targeting a break above Wednesday's swing high. Resistance above 2550 are 2560, 2572, 2585, 2600.
• Bearish below 2550. Supports are 2535, 2523, 2514, 2503

For ES, Key level For Friday is 1318.

• Bullish above with resistance levels at 1325, 1328, 1332, 1339
• Bearish below, with support levels at 1314, 1308

EU leaders meet on emergency market measures, basically trying to figure out ways to push the inevitable total economic and financial collapse into the future. 

Trade Guideline For Thursday

A gap-up above prior trading range high (2550) triggered short-covering rally on Wednesday. While ES trended up all day, squeezing the shorts and then closing near the high of the day, NQ consolidated and traded sideways in a narrow trading range above prior trading range and then closed in the middle of the range. The direction of Thursday's move will depends on where it trades in relation to its key level..

Key Level For NQ on Thursday is 2565, with Resistance at 2580-2585, Support at 2550.

• Above 2565 implies it is going to rally up to the next resistance zone 2580-2585.
• Below 2565 implies a re-test of 2550 support. A clear break below 2550 implies a decline to support 2530 then 2520.
• Potential liquidation decline on a sustained break below 2520.

Key Level For ES is 1325

• Bullish above 1325, with a target move up to break above prior swing high of 1332 area.
• Below 1325 implies it may want to re-test prior trading range high of 1318, which is now support.

A series of ratings downgrades from Moody’s last week has created an unwelcome but manageable liquidity squeeze on three major banks, by forcing them to post billions of dollars in additional collateral against derivatives exposures.

Trade Guideline For Wednesday

Nasdaq continued to consolidate on Tuesday, trading between support and resistance. A clear and sustained break out of the trading range could trigger a fast trending move in the direction of the breakout. 


Key Level for NQ on Wednesday is 2545.

• Above 2545 implies it is going up to the next resistance zone 2560 - 2565. On a strong short-covering rally, a clear and sustained break above 2560-2565 could take NQ up to 2580-2585 resistance.
• Bearish below 2545, first downside target is a re-test of Monday's swing low. A clear and sustained break below Monday low can trigger a fast liquidation drop to 2505, then 2440-2460

Key Level For ES is 1314, 

• Resistance is 1316, 1320, 324, 
• Support is 1306, 1300-1302
• A clear and sustained break below 1300 could trigger a fast liquidation drop.

Credit contraction in Europe is very bearish, and could trigger a stock market crash, so be on a lookout. Bloomberg reported that Spain is poised to be downgraded to junk as CDS near record.

http://www.bloomberg.com/news/2012-06-26/spain-poised-for-downgrade-to-junk-as-default-swaps-near-records.html

Trade Guideline For Tuesday In NQ

Nasdaq opened with a large gap-down and then trended down to 2520 support on Monday morning before bouncing and then consolidated the rest of the day. Whether it is going to continue to consolidate and go higher as we opens on Tuesday depends on where it opens and trades in the morning in relation to key price level.

For Tuesday Key NQ Level is 2530.

• Above 2530 implies it is still in consolidation mode. If so it should continue to go up, with upside target of 2550 area, first resistance. If it breaks above that resistance, the next level above is 2560. It should not go much above 2560 unless the Fed comes in to buy aggressively.
• Below 2530 implies a decline to re-test Monday's swing low. A break below Monday's swing low can take NQ down to the next level 2505 double-bottom support. If that level clearly breaks it could cause those holding long position to exit, hence triggering a fast and large liquidation drop, potential target 2440 - 2460.

Moody's downgraded 28 Spanish banks on Sovereign risk

Trade Guideline For Monday In NQ

NQ stay above key level on  Friday, as it pushes higher it eventually triggered some short-covering which helped pushed price up to near 2585 resistance level. 

Key Level for Monday is 2565, resistance 2585 and support 2550-2555

• Bullish above 2565, targeting a break above 2585. If it can break and stay above 2585, on a clear break, next upside target is 2600.
• Below 2565 implies NQ is going to test last Thursday and Friday swing low. A clear and sustained break below 2540 can trigger some fast liquidation decline, targeting 2500 - 2510. 
• Below 2500, it is in crash mode, next support is 2425.

Banks downgrade by Moody's Investor Services on Friday is detrimental to the health of the whole credit market.

Trade Guideline For Friday In NQ

Morning rally to close the gap stayed below key 2620 level (resistance). Its inability to break above 2620 level started a sell-off that gained momentum after the release of bad Chicago PMI and Phily Fed number.

There were several other reasons for the selloff on Thursday, including the downgrades of banks by Moody's and the failure to announce any new quantitative easing by The Fed at their meeting yesterday, at least not yet. The PMI and the Phily Fed numbers were just an excuse to sell. Unless the shorts decides to cover ahead of the weekend the sell-off should continue. 

Key Support-Resistance Level for Friday is 2560.

• Consolidation above, targeting 2585. If the rally is strong, next resistance is 2600.
• Below 2560 implies the sell-off continues, next support down is 2540. If that level breaks, next support is 2510.

European Debt crisis continues to intensify, with bank run in many European countries 

Trade Guideline For Thursday In NQ

Wednesday was a consolidation day with NQ trading between 2600 support and 2620-2625 resistance. For Thursday, unless NQ can clearly break and stay above 2620 we can expect another consolidation day.

Key Level For Thursday is still 2620.

• Above 2620 it may want to break out and trend to 2640. A clear and sustained break above 2640 could trigger a fast short-covering trending move up.
• More consolidation below 2620, targeting 2600 and 2585.

Interesting article from Larry Summers, entitled Avoiding a Global Catastrophe

Link: http://www.washingtonpost.com/opinions/lawrence-summers-avoiding-a-global-catastrophe/2012/06/18/gJQACsBklV_story.html

Trade Guideline For Wednesday (NQ)

A large gap-up open on Tuesday triggered a short-covering rally that lasted most of the day with some profit-taking decline at the end of the day. 

With the FOMC policy announcement due in the afternoon, there may be more short-covering rally on Wednesday if the Fed is going to announce some form of stimulus. There is usually some pullback down in the morning ahead of the FOMC decision.Without any stimulus however, the market may sell-off.

Key Level For Wednesday is 2620.

• Bullish above with the next resistance at 2640. A clear and sustained break above 2640 can trigger another round of fast short-covering rally.
• Below 2620 implies a decline down to 2600 then 2585.

Trade Guideline For Tuesday in NQ

A trending-up day on Nasdaq on Monday with a close near the day high, right between 2585 support and 2600 resistance. The 60-minute trend is up, with ab = cd upside target at 2640.

Key Level For Tuesday is 2585, with resistance at 2600.

• Bullish above 2585, with the next upside target ar 2600, then 2620, 2640.
• Below 2585 implies it is going into a pullback mode, target down is 2555 - 2560

European debt crisis continues, next domino to fall is Spain.

Trade Guideline For Monday In NQ

With the Greeks election over it should not surprise anyone if The fed and the ECB would be busy tonight and tomorrow with their market manipulation activities. Whether or not they will be successful in pushing the market up and whacking gold down, only time will tell.

Key level for NQ on Monday will be 2555.

• Above 2555 is bullish with the next resistance at 2580, then 2600, 2620, 2640
• Below 2555 implies NQ is going into consolidation/reversal down mode, targeting 2540 then 2530, 2500

Trade Guideline For Friday (NQ)

Another consolidation day on Thursday. NQ has been inside the same trading range for six consecutive day, albeit contracting range, a setup for explosive trending move.

Key Resistance is 2555, Key Support is 2505. Trading range = 2505-2555

• More choppy consolidation inside the range 2505-2555
• A sustained break out of the range could trigger a trending move in the direction of the break.
• A falsebreak would imply a reversal to test the opposite range.

Europe braces for Greek Vote.

http://www.nytimes.com/2012/06/15/business/global/europe-braces-for-greek-vote-and-maybe-more.html?_r=2&pagewanted=all

Trade Guideline For Friday In NQ

It was very clear that the momentum of the rally which started on Wednesday and continuing into Thursday was getting slower and slower, indicating it was not going to breach Tuesday's swing high.

In fact Thursday's morning high was a 70% retracement level of the decline from Tuesday's swing high to Wednesday's morning low swing low (retraced in ab=cd  EW equal leg zig zag fashion)

For Friday, Key Inflection Level is 2530

• Bearish below 2530, targeting a decline down to re-test Tuesday's swing low of 2505. A break below 2505 that does not hold could cause a fast snap-back rally up to 2535 area. A sustained break can trigger a fast liquidation decline.
• Bullish above 2535, targeting a re-test of Thursday's swing high.

FED interventions & markets

Chart Correlation between FED Monetizing and Stock Index and CRB Index

With the effect of The FED's Operation TWIST and ECB LTRO diminishing by June 2012 the stock market and the commodity market have started to decline. 

Without further stimulus anytime soon the stock market and the commodity market are going to tank. The FED will come in to the rescue of course but no one really knows at what level they FED will come in to support the market.

The following are a series of charts showing the impact
Chart 1: QE and S&P 500

Chart 2: Up to date version courtesy of Ed Yardeni 

Chart 3: QE and CRB Index Chart

Growth In The Age Of Deleveraging

Link: http://www.bankofcanada.ca/2011/12/speeches/growth-in-the-age-of-deleveraging/

Trade Guideline For Wedensday (NQ)

Tuesday was basically a retracement of Monday's decline. Whether or not it is going to continue to go up or drops back down depends on where it trades in relation to key S/R level, which us 2530 for Tuesday.

• Above 2530 implies it is going to continue up, targeting a re-test of Monday's high.
• Below 2530 implies it is going back down, supports are Monday's swing low, then 2485.

Spanish bond yield hit record on Tuesday

Trading Guideline For Tuesday In NQ

Nasdaq opened gap-up on Monday and then promptly sold-off all day closing near the day low, similar to what happened last week Thursday.

For Thursday where it opens is important in determining the direction and the pattern for the day. Resistance is 2530-2535, and support is Monday's swing low, then 2485.

• Below Monday's low could trigger a quick sell-off down to 2485. 
• Above Monday's swing low implies it is going into a pullback mode up to 2530-2535. A clear and sustained break above implies a potential move up to re-test Monday's swing high.

Gold Market Manipulation

From King World News:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/6/8_London_Trader_-_Staggering_515_Tons_of_Gold_Sold_in_4_Hours.html

“What happened yesterday in the gold market was very interesting.  One full hour before Bernanke's testimony, the bullion banks started selling.  Over the next 4 hours, the bullion banks sold the equivalent of 515 metric tons of paper gold.  This was in just 4 hours, and again, the selling started one hour before Bernanke’s testimony.  

The selling went on for another 3 hours after the Fed Chairman began to speak, and as I said, over 515 metric tons of paper gold was sold.  During this entire takedown, there was zero physical gold available for sale in the market.  However, this action did create tremendous supply for the Eastern buyers to lock in the spot price of gold.  This will patiently be converted to physical in the coming weeks.  

The real question here is, how could an entity begin selling such a massive amount of paper gold when there hadn’t been any news (starting to sell before Bernanke's testimony)?  

During this coordinated attack on gold, hedge funds and managed money were being forced out of their paper positions.  A large wave of selling entered the paper gold market and traders saw the price of gold drop $40 in a matter of minutes.  So the action was orchestrated by the Fed, and Fed-speak was used to assist in the takedown" 

 

Trade Guideline For Monday In NQ

Last Friday with NQ opening gap-down to complete its pullback, a clear and sustained break above key 2535 level at about 10:30 am eastern confirmed that pullback mode has ended and the next leg up is in progress.

NQ trend-up and closed near the day high just below Thursday's swing high. With Spain's agreement this weekend to the 100 billion euros bailout for its bankrupt banks the US markets may open gap-up on Monday. 

For NQ, Key Inflection Level for Monday is 2550, with key resistance at 2570. 

• Above 2550 is bullish. A sustained break above 2570 or a gap-up above 2570 could trigger a fast short-covering rally, targeting a move up to 2600 - 2620.
• Below 2550 implies it going back into consolidation mode before breaking out above 2570 key resistance. Key support is Friday's swing low.

Trade Guideline For Friday In NQ

NQ opened gap-up to 2370 resistance on Thursday and then drop down all day in a choppy sideways consolidation mode down to support. Whether that is enough pullback for the next upleg depends on where it trades in relation to key level on Friday.

For Friday, Key Level is 2535.

• Above 2535 implies the pullback had ended and the next leg up is in progress, targeting 2580, 2600 and 2620.
• Below 2535 implies it is still in a retracement mode, target down 2500 then 2490.

Trade Guideline For Thursday (NQ)

A large gap-up open on Wednesday triggered a short-covering rally that lasted the whole trading day. This type of day is often followed by a higher high the following day, occurring in the morning or later during the day.

Key Level For Thursday is 2535.

• Above 2535 implies the uptrend is still in progress. Resistances are 2545, 2570, 2585
• Below 2535 implies it is going into a pullback/consolidation mode.

Trading Guideline For NQ on Wednesday

NQ opened above key level on Tuesday implies bullishness and will try to break above 2480 resistance, then closed above 2480 Tuesday's resistance now turned support for Wednesday. 

Traders are waiting for the announcement from the ECB when they meet on Wednesday. A major decision to support the troubled countries could trigger a short-covering rally. Without which it could trigger a global sell-off.

Key Level For Wednesday is 2480.

• Above implies bullishness and could trigger a short-covering rally, upside target is 2500 -  2520.
• Below 2480 implies it is going into consolidation, with 2465 support. Not anticipating major sell program until it  breaks and stay below 2440 swing low/support

Trade Guideline For NQ on Tuesday

A gap-up opening above key 2465 level on Monday was an indication that the fast mode downtrend has ended, and consolidation is to be expected, which was what happened on Monday as NQ traded sideways inside a trading range between 2443 - 2480.

For Tuesday key level is 2460.

• Above 2460 is bullish and NQ may try to break out above the upper range, and if successful, it is likely to trigger a short-covering rally, targeting 2500 - 2520 area.
• Below 2460 implies it is going to re-test Monday's low. Breaking and staying below Monday swing could trigger another round of Sell Programs.

BIS warns global lending contracting at fastest pace since 2008 Lehman crisis (Telegraph).

http://www.telegraph.co.uk/finance/financialcrisis/9309393/BIS-warns-global-lending-contracting-at-fastest-pace-since-2008-Lehman-crisis.html

Trade Guideline For Monday (NQ)

Nasdaq opened gap-down below key support level last Friday, stayed below it, then trend down all day as the bulls capitulated into the close, closing at the day low.

This sets up another capitulation day, a large gap-down opening, or morning trend-down, unless it can pullback up to above key level.

Key Level For Monday is 2465.

• Below 2465 implies NQ is still in a fast mode down, support are 2425, then 2400. Next support for ES is 1260. A crash could easily break below those support zones.
• Above  in NQ implies it is going into a pullback mode, targeting 2485. If short-covering rally can gain momentum, next target up us 2500.

European debt crisis is deteriorating at a rapid rate, and could turn into uncontrolled panic, triggering a crash if central bankers get overrun by sell orders.