Watch For This Historical Bias
The
December SP 500 and Dow futures opened with gaps to the upside off of
more upbeat news on the economy. The ensuing gap and trap gained steam after
better-than-expected Michigan Consumer Sentiment and Chicago PMI reports
couldn’t muster any buying interest. Rumors of a funny-smelling gas attack in a
NY subway (I’m not sure what would be distinguished as “funny smelling” in a NY
subway) broke the contract sharply into negative territory. The futures faded
sideways, allowing MA resistance to come down and flush the sellers out in a “V”
bottom and the low of the session (see chart). The lunchtime grind back up into
positive territory ran out of gas at the session high and Tuesday’s high, right
at R1 at 1,058, and the contract spent the rest of the session chopping around
under that resistance level.
The December SP 500 futures
closed Wednesday’s session with a gain of +3.75 points, and finished in the
upper half of the daily range. The December Dow futures closed the session with
a +21 point gain, and also finished in the upper half of its range. Volume in
the ES and YM was estimated at 481,000 and 36,000 contracts respectively, well
below Tuesday’s pace and below the daily average. Open interest increased again
on Tuesday’s up move, however, the light volume is more indicative of a lack of
sellers than a lot of new buying coming into the market.
On a daily basis, the ES took
an intraday bounce off of its 20-day MA and posted a dragonfly doji for the
session. On an intraday basis, the ES bounced off of 30-min support at 1,047
(200 period MA and 61.8% Fib retracement of Tuesday’s range) and the 13-min,
30-min, and 60-min charts all closed with cups and handles that need to break
1,058. The YM bounced off of its 10-day MA and posted a dragonfly doji its
20-day MA.
The markets close early on
Friday at 1:00 pm ET, with no economic reports scheduled. Aside from last year,
the day historically has a strong bullish bias, but needless to say, volume will
be extremely light. Speaking of history, the week after Thanksgiving last year
was the beginning of a 4-week correction. With that, I have to throw in my
favorite tongue-in-cheek phrase, “This time, it’s different!”
Have a great Turkey Day and remember that there
are many things we should be thankful for
Please feel free to email me with any questions
you might have and have a great trading day on Friday!
chrisc@tradingmarkets.com