How Do You Spell Quiet?
How do you spell quiet? How about S – & – P? This morning,
S&Ps were trading at 1512.50, down 1.10. Volume is light. Friday was one of the slowest days of the year on Friday. Volume on the NYSE was only 670 mln shares. Estimated S&P futues volume was 41,000 contracts.
Also, implied volatility made a new low for the SPU at 15.17. And to further illustrate the complacency in the market, today a one-standard deviation move in the SPU comes in at 14.40. Typically a one-deviation move is in the high-teens to low-twenties.
One positive from Friday’s market action was that the market essentially stayed above 1511. For today, taking a look at the upside, we need to get above 1513.50. This should lead to a retest of the 1517 area. Above 1517, the key number is 1519.90, which is a 88% retracement of the down move from 1533 to 1424. Typically the index futures market like to retrace around that 88% level.
Above this number, the next band of resistance comes at 1525 to 1526. If we get above that, the 1533 highs from July should be seen.
On the downside, below 1510, look for support between 1506 and 1505 to be tested. Below 1505, we expect the 1500 to 1498 zone to be tested. If this is broken, look for 1491 to 1488.
NASDAQ futures were 3949, minus 10 handles (1000 points). To say volume is light doesn’t even cut it. Lightest volume we’ve seen this year on Globex. One key in the NDU from Friday was the setback at 4000. The market made a 4002 high and then sold off to finish 600 points lower on the session.
We think a key area is 3965 to 3975. If we get above that zone and hold it, 4010 comes into play. Above 4010, look for a quick run to 4050. Any settlement above 4050 is bullish, and targets a good run back to the 4133 area.
One cautious note, we are trading at 6% above the 100-day moving average. Typically, readings of 8% or more signal a sideways to downward move coming. Traders shoulds be aware that this may not the be rally on which to produce fresh longs. On the downside, if NDU can’t get over the 65-75 range, 3930 to 3925 becomes key.
Below this level, look for 3905 to 3895 to be tested. If this fails, we’re looking for 3850. Along the way, 3880 is support as is 3855 to 3845.
The Dow keeps moving sideways. However, it’s been sideways to higher, which surprised us somewhat. We continue to look for the general sideways action to continue. We do think it will favor the downside more than the upside from here. As far as the cash is concerned, we are looking for a retest of the 11,000 area, where this market should find support.