Be Alert For A ‘Gap And Trap’
The December S&P futures
(SPZ and ESZ) opened Tuesday’s session with less than a 1-point gap
to the upside. After light selling off the open, the contract reversed and
consolidated on its Daily Pivot before making a quick attempt at Monday’s high
just above 1,025. The futures broke short off the failed attempt and gave the
best follow-through move of the session down to a new low. The dip buyers
stepped in to support the contract at its 20-day MA and the futures bided time
in a triangle pattern until they could take their cue from the bond close at 3
pm ET and break to the session high. Selling in the last 1/2 hour pared some of
the gains and pushed the PREM to a pretty nasty discount to the cash SPX. I’ll
be alert for a “gap and trap” on any gap up on Wednesday.
The December S&P 500 futures closed Tuesday’s
session with a gain of +4.25 points, and finished in the middle 1/3 of its daily
range. Volume in the ES was estimated at 609,000, which was behind Monday’s
pace, but still above the daily average. On a daily basis, the contract reversed
off of its 20-day MA and daily uptrend line support and was able to close back
above its 10-day MA at 1,023. On an intraday basis, the 60-min bullish Gartleys
and Butterfly fell just short of their 1,030 target. The contract broke 3-min
and 13-min symmetrical triangles this time to print the session high and pulled
back to settle on support (see chart). The 1-min 3-Line break chart closed with
a short bias.
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Please feel free to email me with any questions
you might have, and have a great trading day on Wednesday!
chrisc@tradingmarkets.com