The Spoos Need To Hold This Level

September 10, 2003
Chris Curran

The September S&P
futures (SPU and ESU) opened Tuesday’s session with a -3.00 point gap
to the downside, and right at the overnight Globex low, due to mixed views out
of a few of the tech sectors.Â The futures churned in a 2-point range off the
open before a report at 10 am that inventories at U.S. wholesalers were
unchanged did nothing to impress the market. Good broker selling and a rising
TRIN, which we’ll cover live in my upcoming

seminar, snapped the contract’s back with enough pressure to break down
through Monday’s low.Â

However, it started to look like a repeat of the
past 2 weeks as the contract clawed its way back to the opening level in the
1027-28, but the dip buyers seemed to run out of steam. The futures drifted
lower through the lunchtime lull before a second rally attempt ran out of gas.Â
The contract attracted some good volume selling on the second break through
Monday’s low to post a new session low before some short-covering into the close
pared the losses. Despite the narrow high-low range, Tuesday’s “rhythm” was
different in that the intraday moves saw some decent follow-through that allowed
for some great trades.

The September S&P 500 futures closed Tuesday’s
session with a loss of -6.50 points, and finished in the middle 1/3 of its daily
range. Volume in the ES was estimated at 599,000, which was behind Monday’s
pace, and above average. Open interest did decline after Monday’s up move, but
that was most likely due to spread players rolling positions over to the
December contract.Â On a daily basis, the contract is still hovering at the
first reversal area on a bearish Butterfly pattern and needs to hold 1,022 to
avoid breaking short on the daily 3-Line Break chart (see chart).Â

On an intraday basis, Monday’s 13-min cup &
handle turned into a very orderly symmetrical triangle and closed with a bear
flag at resistance (see chart). The 60-min chart is testing the trend line drawn
across the 8/26 and 8/28 lows.