Here’s The Bottom Line
The December S&P 500
futures (SPU and ESU) finished
modestly lower during a week
when things could have been much worse. Disappointing earnings updates were
given by Nokia, Texas Instruments and Oracle, along with some weak economic
reports such as Weekly Jobless Claims, but the indexes were able to escape with
little damage done. A supposedly new Osama bin Laden tape, which rattled market
players on Wednesday, also didn’t have a lasting effect. By and large, there
continues to be a shortage of sellers in the futures and equities markets.
Volume was roughly in line with the previous week, while overall breadth
continues to paint a bullish picture.
The December S&P 500 futures closed Friday’s
session with a gain of +1.25 points, but finished down for the week with a loss
of -5.75 points. Volume in the ES was estimated at 641,000, which was ahead of
Thursday’s pace, and above the daily average. With the pause this past week, the
contract posted a spinning top and a market structure high as it diverges at the
61.8% retracement of its 2002 decline, and still isn’t out of the woods on a
bearish Gartley pattern (see chart). On a daily basis, the contract found
support at its 20-day MA at 1,007.50, but stopped again short of its 10-day MA
at 1,019.50. On an intraday basis, the 13-min chart closed with a cup and
handle. The Banking Index (BKX) found support off the lower trend line on its
daily triangle pattern.
The
next several months will be a very critical time period for the U.S economy.
With the tax rebate stimulus now behind us, it’s going to be essential that
consumers maintain their healthy spending patterns. This could be a tall order
given the fact that the employment picture is not improving and household debt
is at extreme levels. Also, the declining interest rate cycle, which allowed
consumers to lower their monthly mortgage payments and extract money from their
homes is many cases to shore up cash, has pretty much faded. The bottom line
with the consumer is that overall employment needs to pick up for consumers to
continue spending at the pace we have seen in July and August. For employment
to pick up, most corporations may need to see a sustainable increase in
end-demand for goods and services. Let’s not forget, corporate America has gone
through a very large layoff process over the last two years, and still isn’t
over. Before these companies start hiring workers back, ample evidence will be
needed that the current strength is not just the result of a one-time tax rebate
and/or another inventory build-up that is creating an artificial sense of
demand.
Looking ahead this week, the economic calendar
is highlighted by Tuesday’s CPI report, with its consensus of 0.3%, as well as
the FOMC meeting. Rates are expected to be left alone, but the focus will be on
the Fed’s bias statement for any clues on future moves. The week’s action is
capped off with Friday’s quarterly “Quadruple Witching” options and futures
expiration. I will be heading to Los Angeles on Tuesday for the rest of the
week, and if you’d like to join me and an exclusive group of traders in a very
personal and unique 3 days of E-mini trading, click
here.
Daily Pivots for 9-15-03
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| COMP | 1844.02 | 1866.05 | 1877.08 | 1899.11 | 1832.99 | 1810.96 | 1799.93 |
| INDU | 9446.94 | 9512.93 | 9554.31 | 9620.30 | 9405.56 | 9339.57 | 9298.19 |
| NDX | 1348.52 | 1366.74 | 1375.84 | 1394.06 | 1339.42 | 1321.20 | 1312.10 |
| SPX | 1015.33 | 1022.95 | 1027.27 | 1034.89 | 1011.01 | 1003.39 | 999.07 |
| ESZ | 1013.33 | 1021.42 | 1026.33 | 1034.42 | 1008.42 | 1000.33 | 995.42 |
| SPZ | 1013.40 | 1021.30 | 1026.20 | 1034.10 | 1008.50 | 1000.60 | 995.70 |
| NDZ | 1352.33 | 1372.67 | 1383.33 | 1403.67 | 1341.67 | 1321.33 | 1310.67 |
| NQZ | 1352.00 | 1372.50 | 1383.00 | 1403.50 | 1341.50 | 1321.00 | 1310.50 |
| BKX | 866.78 | 872.28 | 876.39 | 881.89 | 862.67 | 857.17 | 853.06 |
| SOX | 448.59 | 455.55 | 459.08 | 466.04 | 445.06 | 438.10 | 434.57 |
| DIA | 94.78 | 95.47 | 95.88 | 96.57 | 94.37 | 93.68 | 93.27 |
| QQQ | 33.57 | 34.09 | 34.36 | 34.88 | 33.30 | 32.78 | 32.51 |
| SPY | 102.15 | 102.94 | 103.44 | 104.23 | 101.65 | 100.86 | 100.36 |
| SMH | 36.68 | 37.26 | 37.56 | 38.14 | 36.38 | 35.80 | 35.50 |
Fair Value & Program Levels
Fair Value — (2.00)
Buy Premium — (0.64)
Sell Discount — (3.22)
Closing Premium – (2.23)
Please feel free to email me with any questions
you might have, and have a good trading day on Monday!
Chris Curran
P.S. Spend 3 days with me
trading the E-minis live!
Click here for details.