"Defense Wins Games" Traders Go into Protection Mode:
ESZ3- "Defense wins games" Traders go into protection mode: Equities have stabilized from Friday's selloff as the S&P reached a new swing low at 1701 by a quarter point. The market is still hugging this level 1700 but we believe a combination of quadruple witching, a failure to follow through early, the new that Clive Capital ($1 billion hedge fund) will liquidate and pure profit taking all had a hand in Fridays pullback (Merkel was expected to win the election and likely didn’t play a role). Fed members Lockhart, Dudley and Fischer are scheduled to speak today. The two major closing levels to watch are 1704 and 1698.50, a continued close below either of these levels this week will signal a healthy consolidation. Only a close below 1674 will show signs of failure. There is a gap from a week ago when the market digested Summers' withdrawal from being considered to replace Bernanke and the S&P may search for this in a consolidation, coming in at 1387.75 - 1384. Bears can look to sell a new session high against 13710.50 on the first test just as the bulls can look to buy 1698.50 on the first test to begin the week.
Pivot - 1704
Resistance - 1710.50**, 1717.75-1718.25*, 1723.25**, 1739**, 1757****
Support - 1698.50**, 1387.75**, 1384**, 1374***
CLX3- Close below trendline and the Bears could take control: Crude Oil has traded in a $1 range currently sitting just below the 105.12 highs. The market reached a new swing low last night but did find support above the major 103.74 - 103.93 line in the sand. A move and close below here will signal a further correction. Despite upbeat Manufacturing data in China last night, Crude has showed little mojo. After failing to follow though, many longs are getting tired. Furthermore, as mentioned in Friday's update, geopolitical tension and supply issues have eased to compliment new demand worries as the Fed adjusted their growth forecast lower. Crude must close back above 106.23-.36 in order to regain bullish momentum. Until then we will look to sell rallies on a retest to this level, as the bears will remain in control. Friday held the 104.40-.54 level but a close below here will be here will be crucial for the bear camp.
Resistance - 105.40*, 106.23-106.36***, 107.54-107.68**, 108.24-108.4***
Support - 104.54-104.40**, 103.74-103.93***, 101.50-.64***
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