Morning Commentary for Monday, January 10, 2011

by Steven Chanin on January 10, 2011

Good Morning SOM traders. Last week the market tried to sell off on 3 out of 5 trading days only to be bought on the dips. It will be interesting to see how long that can continue without a serious correction taking place but we should all be looking over our shoulders at this point! Looking forward…here are this week’s economic announcements that could move the markets (all announcements are pre-market, 8:30am, unless indicated and all times are EST) – Thursday: International Trade and PPI, Friday: CPI, Retail Sales, Industrial Production and Consumer Sentiment. Overnight the Asian markets were mixed and at the time of this writing Europe is 1-2% lower and US index futures are lower indicating a lower opening today.

Technicals…All oscillators are still overbought, and while the markets can continue to move higher while remaining overbought it is becoming more and more likely that we are due for a technical correction. Here is what I see for technical support/resistance (all MAs are 6 month Exponential):
DJI: support $11,560 (20 EMA) resistance $11,905 (prior swing high)
SPX: support: $1,255 (20 EMA) resistance $1,310 (2008 swing high)
NDX: support $2,233 (20 EMA), resistance $2,234 (pre-crash swing high)
RUT: support $764 (prior swing), resistance $801 (2008 swing high)

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