TraderMongers Day Trading Economic Analysis: September 1, 2010 FOMC Minutes
Understanding the direction of the market as well as the economic activity will lead to profitable trades
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End of vacations and back to school hits September as it starts the business year. Crude oil will be reaching its peak in September as hurricane seasons are behind us. Yesterday's FOMC minutes showed the Fed officials divided over the direction of how to manage the changing Fed balance sheet.
August trading volume did not give the markets the lift it needed and continued to end lower as the month continued. Majority of rallies were short-covering rather than institutional buyers and investors entering the markets. The S&P 500 30 minute chart shows the market moving lower and trading below the 144 and 200 day moving averages. Expect a short-covering rally as we begin the first day of September as we head towards the Labor Day weekend.
On the daily chart of the S&P 500, the market continued to trade below the 144 and 200 day moving averages as we approached the end of August. As institutions and investors return to the markets after the Labor Day weekend and volume picks up expect uncertainty to exist as we approach mid-term elections in November. Markets should continue to trade sideways for the next two months until elections are over.
The Market Volatility Index or VIX track prices that investors are willing to pay for options on the S&P 500, usually to protect themselves against declines in stocks.Currently the VIX trading at the 144 and 200 day moving averages indicating more risky approach towards investments and assets. The thin trading volume in August magnifies moves on the VIX so markets could be less liquid markets than fear-driven. Expect us to be at this range until direction comes back into the markets after the 2010 mid-term elections.
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 Resistance Level
1075: Natural Resistance Level
1050: Natural Support Level
Technical Levels 30 Minute Chart
1072: 144 Day Fibonacci Moving Average on 5 Minute Chart
1065: 200 Day Moving Average on 5 Minute Chart
Technical Levels Daily Minute Chart
1096: 144 Day Fibonacci Moving Average on Daily Chart
1087: 200 Day Moving Average on Daily Chart
Daily Economic Calendar
Motor Vehicles Sales
Mortgage Applications / 7.00 EST
ISM Mfg Index /10.00 EST
Construction Spending / 10.00 EST
Petroleum Report / 10.30 EST
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TraderMongers Day Trading Economic Analysis: September 1, 2010 FOMC Minutes
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