2019 Is Bringing More Volatility To The U.S. Indices

Posted Thursday, January 3, 2019 by
Shain Vernier • 1 min read

The U.S. indices have opened on the bear, featuring sell-offs in the DJIA and S&P 500 SPX. For the first hour of trade, the DJIA is off 250, followed by the S&P 500 down more than 20. The big news of the early session is the weakness in Apple stock, which has sent the NASDAQ reeling by more than 75 points in early Wall Street trade.

During the U.S. premarket hours, several secondary economic metrics were released to the public. Here is a quick look at the data:

Event                                                                      Actual       Previous

MBA Mortgage Applications (Dec. 29)               -8.5%          -5.8%

Challenger Job Cuts (Dec.)                                   43.884K     53.073K

ADP Employment Change (Nov.)                          271K           157K

Continuing Jobless Claims (Dec. 21)                    1.740M      1.708M

Initial Jobless Claims (Dec. 28)                               231K            221K

Aside from the lagging MBA Mortgage Applications, today’s stats are somewhat positive. The employment metrics are slowing a bit, but the U.S. economy appears to be relatively strong.

S&P 500 Technical Outlook

At press time, the March E-mini S&P 500 is trading very near a key technical level. The 38% retracement of December’s range looms large and will be instrumental in determining if the recent downtrend is to continue or enter reversal.

March E-mini S&P 500 (ES), Daily Chart
March E-mini S&P 500 (ES), Daily Chart

Here are the topside resistance levels to watch for the remainder of the trading day:

  • Resistance(1): 38% Current Wave, 2509.50
  • Resistance(2): Bollinger MP, 2557.75

Bottom Line: In the event the March E-mini S&Ps put in a strong session, these two resistance levels may come into play. For the remainder of the trading day, I will have sell orders queued up from 2509.50. With an initial stop above Wednesday’s high at 2521.50, this position trade produces 48 ticks using a 1:1 risk vs reward ratio.

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