Watch These 3 Reports Friday

January 30, 2004
Chris Curran

Stock index futures opened Thursday’s session with a
gap to the upside The morning gave us an oscillation range that continued to
contract until the ES finally broke down through Wednesday’s low for a test of
S1 support at 1,121. The contract reversed sharply on volume and showed great
relative strength while the TICK did its thing to trap the shorts. Starting
around 2:00 ET, it pinned the shorts by not giving any decent pullback and then
gave us a couple of 1200-1400 point moves, while price stood its ground, that
set up nice price moves to the upside. The last hour turned into a 2-point
range stare contest as both sides seemed to want a breather.

The March SP 500 futures closed
Thursday’s session with a gain of +1.00 point, and finished in the upper 1/2 of
its daily range. Volume in the ES was estimated at 886,000 contracts, which was
ahead of Wednesday’s heavy pace, and still well above the daily average. Open
interest increased slightly on Wednesday’s slide, indicating that some shorts
got bold. That also makes me think that that increase helped amplify today’s
reversal, as new, nervous shorts scrambled to cover. Looking at the daily
chart, the contract posted a market structure low and a dragonfly doji, and
managed to hold its 20-day MA support. On an intraday basis, anyone up for a
game of ping-pong with 30-min and 13-min bull flags up against a 60-min bear
flag? We’ll be starting out below 60-min and Thursday’s session high resistance
in the 1,134-34.50 area, and above 30-min, 13-min, and Daily Pivot support in
the 1,128.25-28 area. Actually, I can’t complain. That intraday
resistance/support range is wider than a lot of daily ranges we’ve had the past
few months.

Friday morning is pretty quiet
on the earnings front, but we do have a few economic reports, starting with Q4
GDP at 8:30 am ET. Estimates are calling for a 5% increase after Q3’s 8.2%
surge. After the open, we have the Revised Michigan Consumer Sentiment Index at
9:45, and its consensus for a slight decrease to 103.0, followed at 10 am ET by
the Chicago PMI, with estimates for a slight increase to 62.1. With the deep
closing discount on the SPH (3.91), I’ll be looking to be a seller on any
opening gap to the upside, keeping in mind the daily support at 1,130. Also
take note that the Dow E-mini (YM) failed to test and break its session high
like the ES did, so we’ll want to watch for any underlying weakness to rear its
head on Friday.