Day Trading Economic News Analysis: S&P June 2, 2010

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

The stock market plunged as the Gulf Oil Crisis pulled the energy sector lower. The slowing activity in China and the ongoing debt crisis in Europe pushed the dollar higher while pushing commodities trended lower. The S&P 500 index ended at the low of the day breaking the 1075 natural support level on the 5 minute chart to 1071. 2010 is also the year for mid-term elections so expect major activity towards after November’s Election Day.

We have said that we will be within a trading range between 1075 and 1100 due to the slow volume summer months. The S&P 500 index is currently trading below the January 2010 resistance level and ended the day on Friday on the 200 day moving average on the daily chart of 1085.

Market volatility returned with the worst month of May in 60 years. 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. 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.

As long as we stay above this level expect pessimism as we approach the slow summer months. Currently the VIX is above the 144 and 200 day moving averages on the daily chart. The index is above the 30 mark so unless it is below this level do not expect a confirmed rally or upside within the equities market.

Summary of Pivot and Technical Levels

1219: S&P 500 52 Week High

1114: 144 Day Fibonacci Moving Average on Daily Chart

1100: Natural Resistance Level

1090: Strong Resistance Level

1087: 200 Day Fibonacci Moving Average on 5 Minute Chart

1087: 144 Day Fibonacci Moving Average on 5 Minute Chart

1085: 200 Day Fibonacci Moving Average on Daily Chart

1175: Natural Support Level

1050: Natural Support Level

Wednesday Economic Calendar

Motor Vehicle Sales

Mortgage Applications / 7.00 EST

Pending Home Sales Index / 10.00 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.