Watch NAPM – Light The Grill
Whether or not S&P futures will have any volume will depend upon the National Association of Purchasing Managers’ (NAPM) report. If NAPM it comes in around expectations, we anticipate a very thin, quiet trade.
It is important to note on these days that the market will move many times as much as 1,000 points on local-dominated action, or some small institutional decision. What this means for the trader is to avoid trading unless NAPM is outside the expectation range. The Pit will be about half full as most traders — with the exception of myself — are still in holiday mode.
As for those of you who must trade, if the market can stay above 1475, we are friendly to the upside, and we are looking for a test of the resistance band between 1483.50 and 1488.50.
If we get over 1488.50 on a 30-minute closing basis, we could spin up to the 1495 area. On the downside, between 1468 and 1465 is support. If we violate this area on a 30-minute closing basis, look for 1455. If we trade below 1455, last week’s low of 1452 comes into play. We think the key to the upside is 1449. As long as we continue to close above 1449, the upside is intact.
On Friday, the session was dominated by end of the quarter action — especially in the final hour of trading. The techs were the strong performers, while the financials were hit relatively hard. Volume was heavy, and the internal working of the market was negative as 53 of the S&P’s 88 sub-indexes declined.
NASDAQ futures were trading down 17.50 at 3799.50. Do not be fooled by this in thinking we are having a weak opening, as this is the price where the market was trading before settlement on Friday. Remember, at the end of each quarter, stock index futures settle at 3:05 p.m. Central and at their “fair value.”
While we do not want to get into an argument about whether or not the NDU has a true fair value, suffice it to say that the settlement on Friday was 20 handles above where the final trades were going off in the pit. One bit of news, Oracle’s Number 2 man resigned, and the stock is called to open about $2 lower. Today on the upside, if we can hold above 3765-3780 support, we are looking for a test of the major resistance between 3850 and 3880.
Above 3880, we think the market will move to the next target zone between 3930 and 3950. On the downside, below 3760 the support band between 3715 and 3700 comes into play. If this does not hold, look for a move to 3665 and below that we could test 3600. This would be an attempt to fill the leftover upside gap open from the June Employment Report.
As for the Dow, it continues to be stuck in the wedge, and we are bored to death talking about it.