Chicagostock Trading

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On Tuesday the SP500 worked its way higher after a test of the week low 1302.50 held, catching shorts off guard which led to a short squeeze right into testing Friday's lows of 1318.25. This is where the market paused following last Thursday's break lower below the rising channel which was followed by a brief pause seen on Friday as the market held and traded higher causing shorts to cover into the weekend.  On Monday the move down was continued and sellers chased the market lower. Tuesday we saw once again a hold and a trade higher causing shorts to cover, only to lead right into where the market failed on Friday within 1318.25-1331.75.  This is a major range for buyers to squeeze through to show strength and attempt to retest where the market failed at 1336.50-1357.00 as the market tested its 100day moving average which kept a lid on prices and has the market now pressuring against retesting the 200day moving average along with the right shoulder of 1297 built on June 12.  Tuesday the market did show potential as sellers were unable to put in a new low for the week, causing a intraday U turn which built a handle and pushed into highs of 1318.  This push into 1318 is knocking on the door of resistance and is giving sellers their area to defend. Buyers have Tuesday's lows as their reference point to defend pullbacks and use this turn around to attempt to swim against these trends and squeeze through these resistance levels of 1318, 1327, 1336, 1390. Downside support is seen at 1310, break below 1297 gives room to retest the June lows with support at 1282. In the big picture, this is a retest of the inverted head/shoulders that was created mid May into mid June, offering buyers their levels to defend. Failure to do so and a break of the June lows sees room down to next major support at 1209.  We believe this pullback offers opportunity for buyers to step up and trade the long side, scaling out against upside resistance levels and adjusting stops accordingly. The inverted head/shoulders within 1342-1262 offers a 80 point range, if added to 1342, this targets 1422 which is a retest of the year highs at 1419.75.  Ultimately this will give room to run stops against the main May 2008 highs of 1441 which was the reversal that led into the lows of 665.75.  Failure to hold the 1297 level gives the room into retesting those 1262 lows where a break of this gives room to fill the gap from last year down to 1252.50 which puts the sellers into control. The 2nd half of the year begins in July, and how the market trades in the first two weeks will set the tone for the remainder of the year. 

Update: Runners see 1329.75 upside objective met. Adding 9.75 on top of 8.50 locked in. Total of +18.25. Runners don't always play out, but objective is to reduce exposure, take profits along the way, and allow runners to work where if they do, they pay as much as the first and second target combined.

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Yesterday's market action dropped into the 1320 support level with an intraday low of 1317.50 as the market squeezed out the downside. Overnight the trade was a long at 1320 and we have seen Thursday's lows hold providing oppurtunity to lock in intraday objectives on the top side at 1323.50 and 1325.00.  Two thirds of the trade is out and the runner is now doing the heavy lifting with a risk free stop at 1320 and an objective of 1329.75 on the upside. The market is trading very narrow as buyers are swimming upstream and sellers are fighting to break the market lower to close out shorts and lock in profits. 

The SP500 is back at trading the levels from where it broke down early May around 1350.  The market broke its channel at that point and fell into lows of 1287.25 May 21st, before seeing a small bounce that failed to regain the broken channel and was pushed back down to a new low.  Lows of 1362 were made, holding the year lows of 1259.75, and keeping the gap from last year down to 1352.50 OPEN.  This caught another bounce into 1342 on June 11th which was followed by another pullback that retested the lows.  The market came down to 1297.00 and found support, in turn building a right shoulder as it retested the 1262 low and has built an inverted h/s formation.  Since this right shoulder low the market has grinded higher and is now trading through its neckline of 1342, putting the market back within the channel it broke early May.  Taking this range of 1342-1262 gives us a range of 80 handles, adding this to the neckline of 1342 sees an upside target of 1422 which targets the year highs of 1419.75.  Recalling the upside target of 1441 being the May 2008 highs, the market stopped right at its last level of defense against this high which put in the highs this year at 1419.75.  We went into correction off the level and retested the lows of the year, however keeping the gap open has kept the potential to retake 1441 still there.  With a new target of 1422 now the market is working its way through heavy resistance and sellers. Doing so will give room to finally complete that May 08 high of 1441.  The bounce here is retracing the market to where it failed in May, so this will be an uphill battle as it comes back to where we failed within 1361-1411.75 as the range for sellers to defend. Failing to continue this move higher and falling back below 1297 puts the lows of 1262 in sight followed by the year lows of 1259.75 and the gap of 1252.50 to derail this bull.

On Tuesday there was a buy recommendation of 1271 with targets of 1278, 1285, and 1308.  The first 2 targets were completed intraday which allowed to take money and risk off the table by then moving stops to breakeven at 1271 for the last runner target of 1308 to be ran.  The third target or runners are always the gravy or cherry on top of everything as these give profits larger then the first two targets combined. Sometimes they work out, sometimes they don't. However to take out the greed, thought of "should I hold on, should I get out", taking money off the table along the way eliminates this and leaves a position that can continue to gain should the market continue to move in that direction.  On Wednesday the market ran up to 1299 and this was good enough to take off that 3rd target for a gain of 28 handles, totalling 44.5 handles.  Sure enough the market ran to 1308, however no complaints. 

Following the bounce seen the last week of April off the 1354 lows, the market rallied into retesting its daily channel that was broken on April 6th.  The bottom of this channel was hit on the tee as the market put in highs of 1411.75 and failed to move past the level, only to be rejected and turned lower.  Thus far we have seen the market break off this rejection and fall back down into taking out the stops below the 1354-1352.50 lows.  This has the market now testing the bottom of a newly created channel based off the March - May highs.  This test of this bottom channel also sees the market nearing a 50% retracement of the 1259.75-1419.75 rally at 1339.75.  Support should come into play at this bottom range to bounce this market back into retesting the market from where it broke down at 1390-1411.  Failure to hold these levels puts the next major support into play being the 1320 level from where the market broke out of in February, also a 61.8% retracement level.

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Non Farm payroll numbers released this morning showing an increase of 243k jobs and unemployment rate of 8.3%.  This let the market to rip through 1330 into highs of 1336.75. Rewarding overnight buyers:

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