TraderMongers Day Trading Economic Analysis: September 2, 2010 Jobless Claims
Understanding the direction of the market as well as the economic activity will lead to profitable trades
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Yesterday we expected a short-covering rally as we begin the first day of September as we head towards the Labor Day weekend while economic conditions still remain the same. President Obama set a goal of doubling American exports to cushion the economic decline. This is done through deflation by cutting prices domestically.
Investors eagerly bought up stocks and other risky assets on better-than-expected US manufacturing numbers. The S&P 500 30 minute chart shows the market moved higher above the 144 Fibonacci moving averages and the 200 day exponential moving averages.
On the daily chart of the S&P 500, the market is still trading below the 144 and 200 day moving averages on the first day of September. During the month of August the S&P 500 attempted to break through the 2010 January resistance levels starting from 1125 however fell short due to volume. Markets should continue to trade sideways for the next two months until elections are over in November. Volume will expect to pick up after the Labor Day weekend as institutional traders and investors return from their summer vacations.
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.The VIX peaked in May during the Sell in May seasonal trend trading above the 30 mark as institutions and investors switched from equities to cash before the summer season.
Currently the VIX trading slightly below the 144 and 200 day moving averages indicating more risky approach towards investments and assets. The thin trading volume in August magnified 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 in November.
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
Chain Store Sales
Jobless Claims / 8.30 EST
Factory Orders / 10.00 EST
Pending Home Sales Index / 10.00 EST
Natural Gas Report / 10.30 EST
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TraderMongers Day Trading Economic Analysis: September 2, 2010 Jobless Claims
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