What Makes Any Upside Opening Gap Suspect
The September S&P
futures (SPU and ESU) opened Monday’s session with a small 1.75 point
gap to the downside after another anemic overnight range. Some of the brokers
came to work with selling on their mind and, after a pretty light open, unloaded
a couple hundred contracts each. The 10:00 Factory Orders report came in higher
than the consensus but the futures yawned at the report and continued their
slide. After the first hour, the selling seemed to simply dry up, and the
contract began a long grind up in search of some daylight. The first attempt to
break through the opening price and Friday’s close failed before an afternoon
push (possibly helped by a program trade and/or another Saddam rumor) moved the
futures up to positive ground, where they stayed the rest of the session. The
Banking sector got some temporary breathing room after bonds took a
short-covering bounce.
The September S&P 500 futures closed Monday’s
session with a small gain of +0.75 point, but finished in the top third of the
daily range. Volume in the September ES was estimated at 681,000 contracts,
which was ahead of Friday’s pace and above average. On a daily basis, the
contract posted a hammer, but remains below its 50-day MA at 984.50 (see
chart). The VIX opened the session singing “Take Me to the Moon” and tested the
upper end of its 3-month trading range at 25 before reversing and closing just
below Friday’s mark.
Tuesday
morning, we have the July ISM Services report, which is expected to come in at
58.0, and down slightly from June’s report. Tech bellwether Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating)
is also scheduled to give its quarterly earnings report after the closing bell,
and will probably lay it on thick with their usual “spin” on their guidance.
Despite Monday’s high-range close, the weak closing premium will make any upside
opening gap suspect, especially when you combine it with the market’s recent
habit of ignoring better-than-expected news.
Daily Pivots for 8-5-03
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| COMP | 1708.40 | 1729.03 | 1744.00 | 1764.63 | 1693.43 | 1672.80 | 1657.83 |
| INDU | 9147.92 | 9247.27 | 9308.49 | 9407.84 | 9086.70 | 8987.35 | 8926.13 |
| NDX | 1261.71 | 1282.76 | 1298.11 | 1319.16 | 1246.36 | 1225.31 | 1209.96 |
| SPX | 978.45 | 990.12 | 997.41 | 1009.08 | 971.16 | 959.49 | 952.20 |
| ESU | 976.67 | 988.58 | 996.92 | 1008.83 | 968.33 | 956.42 | 948.08 |
| SPU | 976.77 | 988.53 | 996.77 | 1008.53 | 968.53 | 956.77 | 948.53 |
| NDU | 1261.83 | 1282.67 | 1299.83 | 1320.67 | 1244.67 | 1223.83 | 1206.67 |
| NQU | 1261.83 | 1282.67 | 1299.83 | 1320.67 | 1244.67 | 1223.83 | 1206.67 |
| BKX | 866.83 | 882.05 | 890.23 | 905.45 | 858.65 | 843.43 | 835.25 |
| SOX | 393.04 | 399.85 | 404.44 | 411.25 | 388.45 | 381.64 | 377.05 |
| QQQ | 31.40 | 31.97 | 32.48 | 33.05 | 30.89 | 30.32 | 29.81 |
| SPY | 98.17 | 99.34 | 100.17 | 101.34 | 97.34 | 96.17 | 95.34 |
| SMH | 32.62 | 33.23 | 33.60 | 34.21 | 32.25 | 31.64 | 31.27 |
Fair Value & Program Levels
Fair Value — (0.85)
Buy Premium — (0.00)
Sell Discount — (2.73)
Closing Premium – (2.52)
Please feel free to email me with any questions
you might have, and good luck with your trading on Tuesday!
P.S. Learn to trade the E-minis in my new
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