TraderMongers.com: May 4, 2010

Tuesday, May 4, 2010

Day Trading Economic News Analysis: S&P 500 May 5, 2010

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 15^th 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 4^th.

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.

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Day Trading Economic News Analysis: S&P 500 May 4, 2010

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

Consumer spending pushed consumer discretionary and industrial shares higher as well as other market indexes. The S&P 500 index finished up 1202 above its natural resistance level of 1200. Last Friday the Dow was above 11,000 and finished at 11,152 on Monday’s trading. The Nasdaq is only one point below its natural resistance level of 2500. The S&P 500 index traded above the 144 and 200 moving averages on the 5 minute chart however it is still below Friday’s previous high of 1208.

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 15^th tax deadline. As we approach 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 – Monday’s trading 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.

Tuesday offers March factory orders. Factory Orders represent the dollar volume of new orders, shipments, unfilled orders, and inventories reported by domestic manufacturers. Giving a comprehensive look at the manufacturing sector, new orders can act as a gauge of demand while shipments indicate supply. Higher shipments could signal excess demand relative to supply and high inventories signal excess supply over demand. Unfilled orders represent pending goods that may be shipped. Higher unfilled orders signal excess demand over supply.

Tuesday also offers March pending home sales. Pending Home Sales Index is a leading indicator for housing activity providing demand for housing and economic trends. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Equities to watch on these numbers include: Home builders, mortgage lenders, and home furnishings companies.

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

Disclaimer