Off The Lows With A Bullet
Early morning bearish sentiment gave way to short covering and fresh buying above the 1506 level in the SPU. Confusion seems to be the main phrase in the pit, as the dealers come in waves, and it is leading to fast 300-point moves followed by periods of general quiet.
One thing worth taking from this morning is a growing consensus that the SPU does not like the water below 1500. In addition, the financials remain on their heels after strong performances over the past couple of weeks. I continue to watch the performance of MER, JPM, GS and AXP for ideas as to where we are headed. My conclusion is, in the long run, the financials are telling us higher prices ahead — of course, this does not mean much for the daytrader.
For the rest of the session, I would look to be a buyer on 300- to 400-point pullbacks for a retest of yesterday’s 1515 session high. If this high is exceeded, expect a move to a leftover gap located between 1518 and 1520 — one thing I’ve learned in my years of trading the S&P Futures is that our market loves to fill the gaps. On the downside, if we fall back below 1500, especially in the final hour, I would look to be aggressive on the short side for a move over the next few sessions to 1480-1482.50. Also, there was a massive buy order from one dealer that took us from 1506 to 1511 in the span of five minutes, all told nearly 1000 contracts.