Manipulation In The Spoos?

  • June 30, 2004
  • Chris Curran


Stock index futures opened Tuesday’s session at the
flat line, as no new developments out of Iraq offset lowered guidance
from Washington Mutual.  The futures found a bid ahead of the 10:00 Consumer
Confidence report, which was reported at a 2- year high, and then did a good job
of working off the excess before extending the gains.

The
September SP 500 futures closed Tuesday’s session with a gain of +4.00 points,
with the Dow futures rising 6 points.  Both contracts finished in the upper 1/2
of their daily range. Looking at the daily chart, the ES posted an inside market
structure low off of its 20-day MA, while the YM also posted an inside market
structure close as it settled back above its 100-day and 20-day MAs.  On an
intraday basis, the 60-min and 30-min bullish Gartleys hit their first target at
1138.


               

September
bonds (ZB) reversed off of 20-day MA and 50-day MA support to make up about 1/2
of Monday’s losses. The Transports (TRAN) closed right at the butterfly (and
Fib) reversal area.  The see-saw ride continues in the Semiconductor Index (SOX)
as it erased Monday’s losses, only to face daily downtrend line resistance
again.


               

Wednesday
gives us the long-awaited results of Alan Greenspan’s 2-day nap, otherwise known
as the FOMC meeting.  While the Fed groupie consensus is still for a 25-bp hike
in short-term rates, keep in mind that Greenspan has admitted in the past that
he relies a lot on the Consumer Confidence numbers.  If that’s the case this
time around, the markets may be in for a surprise.  Personally, I’d like to see
a 50 point hike and then have the FOMC say that they’re done for the year.

Who’s Responsible?

In the past
2 weeks, I’m sure you’ve all heard the rumors circulating that concern the
alleged manipulation in the SP 500 E-mini market.  While I don’t condone any
type of market manipulation, it probably happens a lot more than we think or
see.  Does anyone remember on the 1st anniversary of 9/11 when the SPoos closed
at exactly 911?  I personally don’t believe that 1 account could “corner” a
market as big as the ES.  But, aside from what I think, do you know what?  It
also doesn’t do us any good to dwell on it either because it switches the focus
of our responsibility, which should unconditionally be our own, to some higher
“THEM” power, and basically makes trading more like gambling.  We have to assume
absolute responsibility for everything that happens to our account because in
the end, we’re the ones that make the final decision and push the button.  It
takes a lot of guts to think like this because you have to step out of the
“comfort zone” of “It’s not my fault” to the “comfortless zone” of “I can do
this and I’m responsible for my results.”  Plenty of people prefer to stay in
the “comfort zone.”  On a weekly scale, there doesn’t seem to be much evidence
that the market is being artificially propped up.  Since coming off the March
highs, the ES has been range-locked for the past 3 weeks, which is not uncommon
for this time of year.  Also, quarter-end window dressing is not a new concept. 
For intraday traders using a scale of days and minutes, the main concern right
now is volatility (as measured by the daily hi/lo spreads), which is just plain
down.  And, by historical standards, there is still plenty of room to squeeze it
tighter.

 

Daily
Pivot Points for 6-30-04

Symbol Pivot       R1 R2 R3 S1 S2 S3
COMP 2029.96 2042.57 2050.21 2062.82 2022.32 2009.71 2002.07
INDU 10394.75 10447.81 10482.20 10535.26 10360.36 10307.30 10272.91
NDX 1501.12 1511.58 1517.52 1527.98 1495.18 1484.72 1478.78
SPX 1135.43 1139.06 1141.88 1145.51 1132.61 1128.98 1126.16
ESU 1134.00 1140.25 1144.75 1151.00 1129.50 1123.25 1118.75
SPU 1135.10 1139.00 1142.20 1146.10 1131.90 1128.00 1124.80
NQU 1502.67 1516.83 1526.17 1540.33 1493.33 1479.17 1469.83
ER2 587.37 592.23 595.97 600.83 583.63 578.77 575.03
YMU 10378.33 10437.67 10476.33 10535.67 10339.67 10280.33 10241.67
ZBU 104.84 105.48 105.81 106.45 104.51 103.87 103.54
BKX 96.33 96.61 96.94 97.22 96.00 95.72 95.39
SOX 476.89 484.15 487.84 495.10 473.20 465.94 462.25
QQQ 37.35 37.61 37.86 38.12 37.10 36.84 36.59
SMH 37.27 37.85 38.15 38.73 36.97 36.39 36.09
IWM 117.07 117.99 118.66 119.58 116.40 115.48 114.81
SPY 113.84 114.25 114.59 115.00 113.50 113.09 112.75

 

Weekly Pivot Points for Week of 6-28-04

Symbol Pivot