Here’s Why We May See Some Support Stepping In
The December S&P futures
(SPZ and ESZ) opened Thursday’s session with a +2.50 point gap to the
upside. The contract quickly filled its small gap before spending the first 45
minutes consolidating into a symmetrical triangle. Heavy broker selling snapped
the triangle and the pressure was great enough to send the SPZ into a fast
market and just sneeze at Wednesday’s low on the way down.
It looked like the bulls were going to take a
stand and prove that Wednesday’s drop was just a 1-day blip, but the buying ran
out of steam at the Daily Pivot at 1014.50. TICK retracement entries, which you
can learn more about in my new
course, were very methodical throughout the morning. After chopping their
way down to the flatline during lunch, the futures made one last attempt to
follow the bonds as they rallied into their close. But, after bonds closed just
off their high, buyers in the ESZ and SPZ began jumping out like lemmings off a
cliff. The selling continued after the equities market closed, leaving the
futures with another nasty closing discount to the cash SPX.
The December S&P 500 futures closed Wednesday’s
session with a loss of -9.50 points, and finished just off the low of the
session. range. Volume in the ES was estimated at 805,000, which was off from
Wednesday’s pace, but still well above the daily average. On a daily basis, the
contract broke its 50-day MA and head-and-shoulders neckline, and settled right
at the 50% Fib retracement of the 8/5 low to 9/18 high (see chart).
On an intraday basis, the 60-min chart said “Gartley
Schmartley” as the pattern failed early in the session, and turned into a great
example of price fading and waiting for MA resistance to pressure it for another
move down. The Gartley failure turns it into a possible Butterfly with a
reversal area around 993.50. On the 13-min and 3-min charts, symmetrical
triangles and bear flags continue to be great set-ups. The 1-min 3-Line break
chart closed with a short bias and break price of 999.50.
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On Friday morning at 8:30 am ET, we have the
Final GDP for Q2, with a consensus revision of 3.1%. That is followed at 9:45
am ET by the Revised Michigan Consumer Sentiment Index and its consensus of
88.5. With quarter-end next week, we may see some support stepping into the
market to protect the fund returns from going to hell in a hand basket, however,
October is shaping up to be a very interesting month. Have a great weekend!
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Please feel free to email me with any questions you might have, and have a
great trading day on Friday!
chrisc@tradingmarkets.com