Look For This Setup On Thursday
The December S&P futures
(SPZ and ESZ) opened Wednesday’s session with a +1.50 point gap to
the upside, after closing Tuesday’s session with a larger than usual discount on
the PREM. The first few minutes were a rerun of Tuesday, as the contract took a
quick dip and then reversed back up to test the high. However, that’s as close
to similarity as it got as the futures were met by hard broker selling. Locals
jumped on the bandwagon, selling the contract down through its Daily Pivot at
1,024.25 and hitting sell stops. The futures tried to consolidate for the next
hour before more broker selling came in and pressured them down to Tuesday’s
session low and daily support at 1,019.25. The break of daily support hit more
sell stops and S2 at 1,015 gave way without much of a fight. The lunchtime
range extended into the afternoon before the last 1/2 hour gave a break of the
session’s low and a new leg down.
The December S&P 500 futures closed Wednesday’s
session with a loss of -18.25 points, and finished in the lower 1/3 of its daily
range. Volume in the ES was estimated at 889,000, which was 46% higher than
Tuesday’s pace, and well above the daily average. On a daily basis, the contract
broke 10-day MA, 20-day MA, and daily uptrend line support, and settled just
above a head & shoulders neckline at 1,005. On an intraday basis, the 60-min
chart is forming a bullish Gartley that projects an AB = CD double bottom in the
1,005 area, and a target back up in the 1,020 area (see chart). On the 13-min
and 3-min charts, symmetrical triangles continue to be the name of the game.
The 1-min 3-Line break chart gave the best moves in a couple weeks and closed
with a short bias and break price of 1,007.75.
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On Thursday morning, the economic calendar
springs back to life with the August Durable Orders report at 8:30 am ET, with a
consensus of a 0.6% increase, and Weekly Jobless Claims, with a consensus of
400,000. That is followed at 10:00 am ET by the New and Existing Home Sales
reports, and their expectations for 1.11 million and 6.07 million respectively.
After Wednesday’s trend day, I’ll be looking for some range contraction and an
oscillation day as the market ponders its next move.
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Please feel free to email me with any questions
you might have, and have a great trading day on Thursday!
Chris Curran