Quiet Sideways Trade Continues
SPU is trading in a tight range off the PPI report. The index futures complex is quiet, as spread trading continues to dominate the session. In addition, traders are already talking about next week’s option expiration and CPI report.
Locals were the early sellers and tried to find sell stops below the 1490 area, but were unsuccessful. This led to a small short-covering rally towards the 1495 area. Since then, most of the local traders have left, leaving the pit about 1/2 full. While volume will be recorded as heavy, it is due to the rollover between the SPM and SPU, and is dominated by dealers. In fact, a substantial percentage of today’s volume will be dealer-to-dealer without much local involvement. I think we’ll be confined to a range between 1505 and 1485 for the session. If we break through one of these levels, it should be worth going with the move. Otherwise, it will be an early weekend for many traders.