The Numbers To Watch Friday
Did you eat your Wheaties? The September S&P futures (SPU and ESU)
opened Thursday’s version of Mr. Toad’s Wild Ride with an 8-point upside gap on
the heels of better-than-expected GDP and Jobless Claims reports. The size of
the gap gave a good chance of a “gap and trap” open with an 85% chance of
filling at least halfway. Merrill Lynch and Goldman Sachs were good sellers off
the open, with Goldman selling well over 1,000 SPU contracts. Locals took most
of the selling and when they couldn’t get a bid going, they turned around and
sold, pushing the price down to fill over 1/2 the opening gap. Short covering
ahead of the 10:00 Chicago PMI report turned into a big squeeze when then report
was released 1 minute early, and showed a higher-than-expected 55.9.
The knee-jerk reaction to the report showed why
it’s best to stand back and let the dust settle before jumping into the market
blindly. Broker selling into the pop brought the market right back down to test
the low of the session, before breaking through and triggering stops down to
Wednesday’s close. But the fun had only just begun! The contract took a big
U-turn off the Daily Pivot at 987.50 and didn’t stop until it put in the session
high at 1,004. The futures then settled into a 4-point range for the next 3 1/2
hours, holding the 1,000 level, until the longs decided to take some money off
the table. The contract bounced off R2 support at 996.25 before taking an
“Oops, forgot the parachute” dive that ended at the Daily Pivot and erased the
lion’s share of the day’s gains.
The September S&P 500 futures finished the
session with a gain of +2.75 points, and in the bottom 1/3 of the daily range.
Volume in the September ES was estimated at 850,000 contracts, well above
average and ahead of Wednesday’s pace. The action left the contract testing the
bottom of its 60-min trading channel (see chart) and a daily gravestone candle
with a long upper shadow. The funny thing is, if you look at the chart I showed
yesterday
here with the horizontal line running through the “median” of the past 2
weeks, the wheels are still just spinning on a daily basis.
One sector that may be tipping its hand and has
the strength to lead the futures to the Unpromised Land is the
Banking sector
(
$BKX.X |
Quote |
Chart |
News |
PowerRating),
which is trying to break down off a daily bear flag (see chart). So what, you
say? The Banks are the most heavily weighted sector in the S&P 500, so where the BKX goes, the SPX will normally follow.
Friday morning, the economic free-for-all
continues with 9 (count ’em 9) reports. The Unemployment Rate will be the most
closely watched at 8:30 am ET as market players will be looking for a small
downtick in the rate to 6.3%. That report is followed by the Revised Michigan
Sentiment at 9:45 am, with a consensus of 90.5, and the ISM Index at 10 am, with
a consensus of 52.0. Any number over 50 on the ISM is indicative of economic
growth, and I wouldn’t be surprised to see a higher number after Thursday’s
higher PMI report. Volume will probably taper off after the first 2 hours and
it probably wouldn’t be a bad idea to reward yourself and start the weekend
early. Remember, the market will always be there on Monday.
Daily Pivots for 8-1-03
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| COMP | 1740.28 | 1752.23 | 1769.31 | 1781.26 | 1723.20 | 1711.25 | 1694.17 |
| INDU | 9264.83 | 9330.37 | 9426.95 | 9492.49 | 9168.25 | 9102.71 | 9006.13 |
| NDX | 1281.95 | 1294.01 | 1310.87 | 1322.93 | 1265.09 | 1253.03 | 1236.17 |
| SPX | 994.58 | 1000.32 | 1010.32 | 1016.06 | 984.58 | 978.84 | 968.84 |
| ESU | 992.92 | 1000.33 | 1011.42 | 1018.83 | 981.83 | 974.42 | 963.33 |
| SPU | 993.37 | 999.73 | 1010.17 | 1016.53 | 982.93 | 976.57 | 966.13 |
| NDU | 1283.33 | 1296.67 | 1314.33 | 1327.67 | 1265.67 | 1252.33 | 1234.67 |
| NQU | 1281.33 | 1298.67 | 1318.33 | 1335.67 | 1261.67 | 1244.33 | 1224.67 |
| BKX | 893.43 | 898.92 | 909.42 | 914.91 | 882.93 | 877.44 | 866.94 |
| SOX | 391.93 | 395.64 | 401.66 | 405.37 | 385.91 | 382.20 | 376.18 |
| QQQ | 31.88 | 32.25 | 32.69 | 33.06 | 31.44 | 31.07 | 30.63 |
| SPY | 99.79 | 100.54 | 101.68 | 102.43 | 98.65 | 97.90 | 96.76 |
| SMH | 32.66 | 33.03 | 33.55 | 33.92 | 32.14 | 31.77 | 31.25 |
Fair Value & Program Levels
Fair Value — (0.86)
Buy Premium — (0.38)
Sell Discount — (2.26)
Closing Premium – (1.01)
Please feel free to email me with any questions
you might have, and good luck with your trading on Friday!