Want To Know How To Play Tomorrow’s Open? Try This

January 9, 2004
Chris Curran

The
March SP 500 futures opened Thursday’s session with a 3-point gap to
the upside after broker upgrades and an upward earnings outlook from
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overshadowed a slightly higher-than-expected Jobless Claims number. The gap-and
trap-open provided a decent short entry to start the day, but the theme again
turned to “backing and filling,” as the contract oscillated around the flat line
before getting its business done and putting in the session high in the last
hour.

The March SP 500 futures closed
Thursday’s session with a gain of +4.00 points, and finished in the top 1/2 of
its daily range. Volume in the ES was estimated at a heavy 655,000 contracts,
which was ahead of Wednesday’s pace and well above the daily average. Looking at
the daily chart, the contract formed a hanging man and is testing the upper line
of its trading channel, with the lower line following in the 1,123 area. Open
interest increased a bit in the ESH during Wednesday’s session, but decreased in
the SPH, so we’ll continue to monitor for more cracks appearing in the armor. On
an intraday basis, the contract wasn’t the cleanest, but still rode its 60-min,
30-min, and 13-min trend lines.

Earnings season officially kicked off after the
bell with Alcoa’s report, so we’ll want to be on our toes for “sell the news”
scenarios with the recent run-ups. Friday morning gives us the
highly-anticipated (as usual) December Unemployment numbers. Estimates are
calling for the Unemployment rate to remain steady at the 8-month low of 5.9%
and for an increase in Non-farm Payrolls for a 5th consecutive month to
148,000. For Friday’s open, I’ll be looking for a repeat performance on any gap
up due to the employment news.