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U.S. Stocks Retreat To Open The Week

U.S. stocks have opened the week on defense. Traders are taking a cautious approach following the release of disappointing earnings reports from several blue-chip companies. The damage has been substantial, with the DJIA(-330), S&P 500 SPX (-31), and NASDAQ(-110) all trading in the red.

On a positive note, the Chicago FED National Activity Index (December) has come in above expectations at 0.27. This number is quite arbitrary, but does indicate strong economic activity for last month. A bit later on today, the Dallas FED will release its Manufacturing Business Index (January). While these reports are secondary market drivers, they may give us a hint at the FED Policy Statement scheduled for Wednesday.

U.S. Stocks Retreat On Open

Sentiment is negative today as FED week gets underway. March E-mini S&P 500 futures are showing the strain, falling toward daily downside support.

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

Here are the levels to watch for the remainder of the session:

  • Resistance(1): Swing High, 2677.75
  • Support(1): Bollinger MP, 2605.00
  • Support(2): 38% Current Wave Retracement, 2586.50

Bottom Line: Today’s weak open isn’t a huge surprise as the coming FED announcement is likely to test the recent uptrend of January. In the event the March E-mini S&P 500 continues to fall, a long from downside support will come into play.

Until elected, I will have buy orders queued up from 2587.50. Using an initial stop loss at 2582.50, this trade produces 20 ticks on a standard 1:1 risk vs reward management plan.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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