Two Things To Expect Ahead Of Friday’s Numbers
The
December S&P 500 futures (SPZ and ESZ) opened
Wednesday’s session and the new quarter with a +3.75 point gap to the upside,
and good broker buying off the open didn’t allow for any of the gap to fill.
The release of the ISM Index at 10 am, which was expected to be a bit weaker
than expected after Tuesday’s Chicago PMI, sparked fast market conditions in
the SPZ and the contract spent the next hour chopping lower.
The retest of the 1,000
level brought the bulls back up to the plate, and the contract’s ability to
hold its ground through the lunchtime lull attracted more buying after the bond
market close. The market’s morning strength was underpinned by high readings
(a normal high reading is in the 750 area) and shallow pullbacks on the TICK
(see chart), which was re-enforced by the ES fading the pullbacks.
The December S&P 500
futures closed Wednesday’s session with a gain of +22.50 points, and finished
in the top 1/3 of its daily range. Volume in the ES was estimated at a heavy
915,000 contracts, which was behind Tuesday’s pace, but still above the daily
average. Open interest increased again on Tuesday’s down move, indicating new
shorts have come into the market, and on a daily basis, the contract is back
up to test its 20-day MA at 1,017.
A strong move through this
resistance is needed to temper the bears and to force a possible short squeeze.
The daily Banking Index (BKX) held its triangle trend line support, and is back
up to test the September reaction high at 905. The 1-min 3-Line Break chart
closed with a long bias and a break price of 1,015.
On Thursday morning at 8:30
am ET, we have the Weekly Jobless Claims with its consensus of 395,000. That
is followed at 10 am by the Factory Orders reports and its consensus of (0.5%).
After Wednesday’s nice trend day, expect some range contraction and position
squaring ahead of Friday’s Employment numbers.
Please feel free to email
me with any questions you might have, and have a great trading day on Thursday!
Chris Curran
chrisc@tradingmarkets.com