Beware The Bounce
A word of caution: The Wednesday before triple-witching usually has a spike down, which is where the rally begins. This morning, SPZ were trading down 440 at 1500 even, with an actual range on Globex for the first time in a long time, of 1499 low and 1509 high. Most of this is due to a downgrade of Intel
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We see 1500 as a major number for today. Below that we have 1498.50, 1495.50, 1492.50 and 1488.50. On the upside, we have a key area at 1502.50, 1504 which was yesterday’s close, a key area at 1505.50, 1507, 1510 and 1514.50. Our Morning Pivot will be 1504 to 1505.50.
NASDAQ called to open 40 lower right now at 3683. INTC news has obviously had a large impact. Since the INTC news came out, we’ve sold off 70 handles, as we were actually trading up 3100 at the time of the news. On the support side, we see 3686 to 3666, then 3620. If we fall below 3620, expect a move down to 3590.
Yesterday’s settlement below 3750 does target a move to test the 3476 low set on August 3. One of the key things for today will be if the pattern holds. The pattern has been a rally in the morning, followed by a strong afternoon sell-off.
If we see a spike-down this morning, beware of the short side, as we’d look to play for a vicious bounce. Sellers beware if we are trading down significantly today. Fresh selling at 80-110 handles lower may not be the best play as we are expecting a reversal this afternoon.
Key area for resistance will be 3750-3755. If we get above that, 3792 comes into play. Above that, 3810-3820, then above 3820 look for a run back above 3870, which will take out yesterday’s high at 3860.
Bear in mind, this market has sold off, high to low, in the last three sessions nearly 8%. Those are normally conditions for a bounce.
As for the Dow, Chase Manhattan’s
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