Stocks have recovered from their session lows after Iraq said it would approve the use of U-2 surveillance planes for weapons inspections and pledged additional cooperation by illegal weapons.
The allowance of U-2 overflights has been a major demand of the United Nations and today's news out of Iraq may be interpreted by some that Iraq will start to comply with Resolution 1441. However, there are those that are skeptical that Saddam Hussein's "compliance" from a French proposal that Iraq pass a law banning illegal weapons had weight in this morning's reversal for stocks.
The Dow Industrials (INDU) 7,921 +0.72% currently trades up 54- points, after being down 62-points at 7,801 earlier this morning. While the Dow Industrials were nearing today's S1 level of DAILY pivot analysis at 7,898 where we might expect some intra-day firming, Iraq news from that level may have any institutional buying at that level seeing further buying from some bearish short covering.
The S&P 500 Index (SPX.X) 833 +0.42% now posts a 3.5-point gain after it too came close to its DAILY S1 level of pivot analysis support of 822. Current levels of trade at 833 are just off the post-Iraq news of 837 and hovering near today's R1 834 intra-day pivot. The SPX's WEEKLY pivot of 840 is perhaps viewed as more "formidable" resistance as it closely correlates with today's R1 of 8141.
For premierinvestor.net subscribers, here is an updated pivot analysis matrix. Updated sections are the DAILY pivot and support/resistance levels and the WEEKLY pivot and support/resistance levels. The MONTHLY levels are left unchanged and won't be updated until the conclusion of this month's trading.
In our Index Trader Wraps at OptionInvestor.com and in each night's "Market Monitor" I post this updated matrix. What we're tending to find is that levels of correlative support and resistance from the WEEKLY and MONTHLY levels seem to have more "influence" on trading. However, there are day's when we see some remarkable correlations between the DAILY, WEEKLY and MONTLY levels where the major indexes listed do tend to trade for more prolonged periods.
Pivot Analysis Matrix
Each morning in the 09:00 AM EST update, we post the buy/sell program premium levels for the S&P 500. Just above I discussed "correlative levels" of support and resistance. The DAILY levels are established each day, from the PREVIOUS day's high, low and close. The WEEKLY levels are established the same way, only here we use last week's high, low and close. I've "highlighted" in red some levels in the S&P 500 (SPX.X) and S&P 100 (OEX.X) that correlate as resistance levels from the DAILY and WEEKLY pivot analysis. In green, I've highlighted correlative levels of support at the DAILY S1 and WEEKLY S2.
Traders that follow the pivot analysis matrix and make correlations between and among the DAILY, WEEKLY and MONTHLY levels can thing of RANGES between S2 and R2 with their trading and check against the various levels either on an intra-day basis or day to day as time permits.
Today's we've seen the indexes tend to "hover" near their DAILY levels for a while, but we haven't seen any tests of "correlative" support between the DAILY and WEEKLY levels. As resistance, we haven't seen a test of the correlative DAILY R1 and WEEKLY Pivot tested either.
This would have the pivot analysis trader currently understanding today's action is really somewhat of a "range" trade, and we're not really seeing a "meaningful" reaction to today's news out of Iraq. At least, this is my interpretation.