Here’s What That Thank-You Note From Your Broker Really Means

March 5, 2004
Chris Curran

Stock index futures opened Thursday’s session unchanged
after Weekly Jobless Claims offered no surprises, and offered one of the
quietest trading days of the year ahead of Friday’s news blitz. The futures
spent the first 90 minutes drifting lower before a buy program forced a round of
short-covering and a test of Wednesday’s session high at 1153. The volume
continued to taper off and although the contract hit a few air pocket moves to
the upside, there was no follow-through action to be found, especially in the
face of both daily and intraday resistance (see below).

The March SP 500 futures closed
Thursday’s session with a gain of +3.50 points, and finished in the upper 1/2 of
its daily range. Volume in the ES was estimated at 410,000 contracts, which was
well behind Wednesday’s pace, and below the daily average. Looking at the daily
chart, the ES continued its move up off of MA support, and posted a “NR7” day,
which points to a good probability of a break from this trading range. On an
intraday basis, the ES continues to have the upside capped by its 60-min and
30-min trend line resistance, and is a great example of how a simple trend lines
carry more weight than all of the proprietary mumbo jumbo.

The Banking Index (BKX) posted
a narrow-range doji as it consolidates just under its all-time high at 1021.
The Dollar Index (DXC) continues to hold its 100-day MA support with another
gain after the ECB left rates unchanged, as expected.

The futures were being
pressured a bit after hours by news from Intel’s mid-quarter conference call.
The tech bellwether tightened its Q1 revenue forecast to the lower end of its
range, which was expected and really is not that much of surprise since the
current quarter is normally the company’s weakest. The heavyweight data comes
out on Friday with the February Non-Farm Payrolls number, along with the delayed
January PPI, at 8:30 am ET. Estimates are calling for an increase of 13,000
jobs to 125,000, however, all I care is to see the volume pick up, for better or
for worse. Until then, stay cool and cut back on your number of trades.
Trading heavily in a low-volume range rarely benefits anyone except your
broker. If you get a thank-you note from your broker, you know you’re trading
too much!