The Dow vs. The Nasdaq…Who Will Win?
The SPU has traded steadily lower since making its session high at 1503 in the first 30 minutes of trading. Option related activity continues to dominate the trading action. However, there have been some sightings of directional selling from the hedge fund world. In fact, the inability of this market to close over 1500 recently is disturbing. If we cannot accomplish this task today it should allow for a negative bias into early next week. Any settlement below the 1484-1483 area in the SPU will add fuel to this fire.
We are still contained within a 1% range for the session. Few traders, us included, were expecting any serious ranges as the option activity tends to equalize the trading into a tight session. Locals were aggressive sellers early, and for the most part have left for an early weekend. Institutions will dominate the trade moving into the afternoon. We are forecasting a neutral trade unless we trade below 1484 or above 1505. In which case go with the momentum. Also, watch the premium for signs into the final hour. If we sustain trade around the 24 point level, look for a strong close. If we trade under 20 look for selling on the close.