Fast Markets And Middle East Tensions
All was relatively quiet on the equity index front when the mideast fighting news broke, leading the SPZ`s to a massive decline on panic selling.
We made a session low at 1345, 18.10 below yesterday’s low, before the market gathered itself and moved off the lows. The trade remains skittish, as players really don’t know what to expect moving forward. One of the keys is taking a look at the cash market, and at our session low, we were only 8 points from our low of the year, which occured in February at 1325.02. If this watermark were to break today, look for massive sell orders to flood the market. In this scenario, I think the SPZ could trade through the limit down price towards 1328.
One of the key things traders must realize today is that prices do not matter. What I mean by that is if players want out, they will get out at any price. We saw some of this in the morning, and it should continue throughout the day. On the positive side, if the dealers come in to buy this afternoon, I think we could have a huge emotional short-covering rally to the 1408 level. My bias is towards the upside, barring any new releases that are negative regarding this mideast drama.