SOLD
A common phrase heard in the pit this morning was SOLD, as locals were hitting bids. After we traded through support around 1488, dealers became actively involved as well. First Boston has been the lead seller to our session lows of 1476.50. Earlier in the session Merrill Lynch was the standout buyer from 1491-1493.
One of the keys to this market continues to be GE and the entire financial sector. If they keep trading lower, I think the SPU will follow before finding support between 1465.60 and 1467.20, where the 30, 50 and 100 day moving averages reside.
We will continue to initiate positions from the short side until we see an hourly close above 1491.50. We have a neutral area between 1487 and 1491. It is worth noting that we have been in a range between 1465 and 1512 for the past 15 sessions. Any violation of these extremes should accelerate the market further in the direction of the breakout. However, before we get carried away, there is very little happening in the pit. I’ll bet that locals will account for over 60% of the volume by the end of the session. Shark infested waters until after the FOMC announces next Wednesday.
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