Morning Commentary and Trading Levels – June 3, 2009

June 3rd, 2009 Posted in Uncategorized

Good Morning Traders

Alright alright alright ... Let's get ready for another great day!

For those of you reading all the Tradehugger.com commentary, you would have noticed my colleague pointing out the 'doji', a trend reversal indicator, form on ES M9 yesterday. I agree.

Yesterday I mentioned to look for a rally then a reversal of that rally after the Home Sales report. We got it. The rally that started from 939.5 only to close just a few points higher at 942.75 helped for yesterday's Doji.

I also told you to to watch DX M9 to for a bottom which would end the rally in equities and many commodities. Well we didn't get the bottom as DX M9 set a new low but I think we're close. I think the pullback in commodities and the modest gains in equities if a leading indicator to the bottom in the DX M9. Again, once this market starts to rally, equities and commodities should retreat from current levels. Of course in a perfect world this scenario will play out. But we're hardly in a perfect word these day.

Morning Reports MBA Purchase Apps rose 4.3% last week. However there was a 44 basis point rise in mortgage rates to 5.25% that will probably dampen this figure going forward.

Challenger Job Cut fell to 111,182 in May vs April's 132,590. Good news but how many jobs exist to actually cut?

ADP Employment fell 532,000 vs expectations of 525,000. Ugly and not a good forecast for Friday's Employment Report.

Factory Orders and ISM Non-Manufacturing Index due out at 10:00 ET. Any weakness here will help equities slide given all the 'green shoots' rhetoric.

Today's Trading Levels and Trade Idea

As I write this index futures are trading:

ES M9 934.50 below S1; YM M9 8656 below S1; NQ M9 1468.25 above S1; TF M9 521 above S1

This is a tough call this morning. I'm bearish and we're already down. I'll be looking for a modest rally from the open. For ES M9 and YM M9, I'll be looking for those markets to trade higher, above their respective S1 values (936.67 and 8662.33), prior to or on the 10:oo reports.

If so, place a Sell Stop at S1 - for ES M9 - 936.50 and for YM M9 - 8662.

NQ M9 and TF M9 have been strong markets however I believe these too will fall. Sell Stops for those market are 1465.00 and 518.00 respectively.

As far as energies go, DX M9 will play a huge roll in QM N9 and QG N9. EIA Petro Supply report due out at 10:30ET. DX M9 has found a bid this morning trading +0.70 at 79.16. This should set up a nice short on QM N9 with any build in supply.

If you want to play QM N9, place a Sell Stop at 67.50. If you want to trade QG N9, call me.

If you have any questions or comments, contact me toll free at 866.312.4965 - Rob

Daily Pivots	6/3/09
EQUITIES	R2	R1	PIVOT	S1	S2
ES M9	955.08	948.92	942.83	936.67	930.58
YM M9	8833.67	8774.33	8721.67	8662.33	8609.67
NQ M9	1508.00	1493.50	1480.00	1465.50	1452.00
TF M9	537.10	531.70	523.50	518.10	509.90
ENERGIES	R2	R1	PIVOT	S1	S2
QM N9	70.05	69.30	68.40	67.65	66.75
QG N9	4.29	4.21	4.14	4.06	3.99