Be Alert For A ‘Sell The News Scenario’

Stock index futures opened
Thursday’s session slightly lower on a lower-than-expected Productivity number
,
and after quickly filling the gap, spent the first 90 minutes playing a game of
tug-of-war and working off some of Wednesday’s move.  Unconfirmed news that
Arafat had died, along with another slide in Crude Oil prices to a 5-week low,
sparked a bid in the equity futures that found good follow-through on the break
of Wednesday’s highs.  Good broker buying helped to provide a floor of
support, with First Chicago a buyer of over 3000 contracts throughout the
session.

The
December SP 500 futures closed out Thursday’s session with a gain of +15.50
point, while the Dow futures surged another +160 points.  Looking at the daily
charts, the ES ignored Wednesday’s doji and posted a new yearly closing high
just under its yearly intraday high at 1163.75.  While the YM is still well
below it’s yearly high, it did manage to break its daily downtrend line and
settle just below its September high.  On an intraday basis, Butterflies
and Gartleys failed a few times on various time frames, displaying the
underlying strength in the market.  For you 3-Line Break followers, both
the ES and YM break prices moved up to 1130.25 and 10009 respectively.  In the
small caps, the ER2 extended off of Wednesday’s bullish engulfing line and
settled just under its yearly high.

               

December
bonds (ZBZ4) continue to stand their ground and trade up their 20-day MA.  The
Semiconductor Index (SOX) continues to have a mind of its own and is resting on
its 10-day and 100-day MA support. 

Friday
morning at 8:30 ET gives us the October Jobs numbers.  The economic pundits
are expecting 175,000 new jobs to have been created, with the Unemployment Rate
remaining steady at 5.4%.  The market’s gains the past week have probably
already priced in a positive report, so be alert for a “sell the news” scenario. 
The VIX also bounced off that low 13 level, suggesting at least a few more days
of upside (bearish for equities).


  

Please feel free to email me with any questions
you might have, and have a great trading week!

Chris Curran