Atypical Price Action

• November 16, 2001
• Dave Floyd

As options expiration week approaches
completion, many traders are left, yet
again, with atypical price action. Scalping, with the exception of the
morning, was non-existent the remainder of the day. Most of the trades I
did yesterday were slightly longer-term than normal (10-15 minutes vs. 3-5). 
The longer-term trades were again initiated off of technical levels (See chart.)
Until the recent price action makes a substantial move away from these numbers,
activity may be continue a bit sluggish. 

The last 10 minutes were highlighted by a push above 1142 to close back near
the high of the day. It is interesting to note that yet again, Merrill
Lynch was the buyer who initiated the break above 1142. In the last few
weeks, Merrill has always stepped in whenever the market hit air pockets to the
downside, (i.e., anthrax scares, terrorist threats, bad economic news). 
Just an interesting observation I figured I would share.

Five-minute
chart of December S&P Futures (SP01Z) 11/15/01 with 20-period
MA

Turning to some of the trading stocks, I am sorry to report again that action
in the underlying stocks continues to be muted and very erratic. Granted, it is options expiration week, but I believe some of the arbitrage plays in the
futures which I discussed in yesterday’s column could also be having an impact. 
Until the action picks up a bit, I strongly suggest to sticking to your game
plan. If a trade does not meet your criteria 100%, do not initiate the
trade.  Being selective will get you through these slower periods.
Extending your time frame a bit will also assist in not getting chopped up.

Key
Technical Numbers

As always, feel free to send me your
comments and questions. Have a great weekend.

Dave