Expect A Holding Pattern Today

The December S&P 500
futures (SPZ and ESZ) opened Wednesday’s session
with a -3.75 point
gap to the downside on light follow-through from Tuesday’s session. Some good
early broker buying, with Merrill Lynch alone a buyer of couple hundred SPZ
contracts, ahead of the 10:00 ISM Services report helped to fill the gap early
and test the Daily Pivot at 1,053, but after the number came in higher-than
expected, the futures saw a “sell the news” scenario that took out the session
low, and didn’t stop until a test of daily 10-day MA and 20-day MA support in
the 1,043 area.

The contract moved into its routine of late after
the first hour or so, churning up off the lows in a tight range and hovering
just under the open print of 1,049. But, the 3:30 ET time frame brought
something we haven’t seen in the afternoons for awhile: good volume. The
high-volume move was good for a push back up to Tuesday’s close before a fall
back again to the 1,050 level. The early release of Cisco Systems’ earnings
report brought in more buying before the close, as the contract settled just off
the high of the session.


The December S&P 500 futures closed Wednesday’s
session with a gain of +1.25, and finished in the upper 1/2 of its daily range.
Volume in the ES was estimated at 556,000 contracts, which was in line with
Tuesday’s pace but still below the daily average. On a daily basis, the
contract reversed off its 10-day MA and 20-day MA support and settled just under
the Oct. high. On an intraday basis, the 60-min, 30-min, 15-min, and 3-min
charts all closed with cups, with room to pull back to support in the 1,050-48
area.

On Thursday morning at 8:30 am ET, look for the
Q3 Productivity report and its consensus for an increase to 8.5%. Also at 8:30
is the Weekly Jobless Claims number, which is expected to decrease slightly to
380,000. Aside from early action due to CSCO shocking the world (at the time of
this writing the stock was all over the map, after having been up +1.30), I
would expect the market to be in a holding pattern on Thursday, ahead of
Friday’s highly anticipated Unemployment report.


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

Chris Curran

chrisc@tradingmarkets.com