Steady And Choppy
The SPZ is trading unchanged on the day in a very choppy session dominated by money flows out of tech stocks and into the old-economy issues.
Our range for the session has been less than 1%, and each time traders try to follow the downside momentum of the Nasdaq, they are forced to cover their shorts creating a traders rally. These rallies have been quite sharp today, nevertheless, they have all failed to exceed previous high-water marks. In addition, one of the premier dealers has been a major buyer between 1414 and 1415.50, taking in close to 2000 contracts all session.
From here I expect more of the same, severe choppy conditions and lots of trader-induced rallies. If we are to rally, it will occur in the afternoon and above the 1425-1427.50 resistance zone I have. If this happens, look for a move towards 1437 zone. I have more resistance between 1433-1438.
If we fail from here, I think it will be due to a collapse in the NDZ. If this happens, I don’t think prices will matter much, and I would look for a settlement near 1390.