End-of-Quarter Dressing?
The most common theme rolling through the SPU pit is a rally due to the end-of-quarter window dressing. After aggressive local selling on the open, dealers continued to bid the market higher in a low key, grinding fashion.
To me, this is a classic example of what happens when day traders, locals included, attempt to pick tops. Instead of looking to buy dips of 300-400 points, most traders were looking for a selloff this morning. This selling increased at certain points of the upmove, but it always ended the same way, higher prices spurred on by dealer buying and day trading short covering.
We have a session high of 1468 and a low of 1455. The pit is starting to empty out ahead of the holiday. Even though we are open for a half day on Monday, I would expect only 50% of the locals to show up and trade. For the afternoon, I would expect the SPU to move back towards the 11462-1459 area. If we fail to hold this support, look for yesterday’s low of 1452, and possibly a trade to the 200 day moving average at 1500.30. If the support zone holds, I expect a late rally, leading us to a settlement above 1474.
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