What Market Players Will Be Watching For Today
The December S&P 500
futures (SPU and ESU) opened Tuesday’s session with a -4.00 gap to
the downside after a profit warning by Sun Microsystems cast a sour mood over
the market. Quarter-end window dressing soon turned to buyers jumping out of
windows as selling ahead of two key 10 am reports snowballed after both the
Consumer Confidence and Chicago PMI reports came in sharply lower than expected.
The futures found support at S2 at 988.75 and fought their way back through
lunchtime to print a new session high, However, after two attempts to break the
Daily Pivot at 1,001 failed, the sellers grew bold again and took the contract
down for another test of Monday’s low of 993.25, before Globex problems just
after the equities close forced a settlement just above that level.
The December S&P 500 futures
closed Monday’s session with a loss of -10.25 points, erasing all of Monday’s
gains, and finishing in the middle 1/3 of its daily range. Volume in the ES was
estimated at a heavy 1,004,000 contracts, which was well ahead of Monday’s
pace, and above the daily average. Open interest declined on Monday’s up-move,
which could be construed that much of the move was due to short covering. On a
daily basis, the contract broke back below its 50-day MA and took a bounce off
its 100-day MA and 62% Fib retracement support at 987.75. On an intraday basis,
the 60-min bullish Butterfly flew South and formed a bear flag into trend line
resistance (see chart). Both the 60-min and 13-min charts opened below support
and finished there despite the mid-day rally attempt. The daily Banking Index (BKX)
is back to test triangle trend line support, with next support at its 100-day MA
at 868.50.
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On Wednesday morning at 10 am ET, we have the
September ISM Index and the August Construction Spending report, with a
consensus of 55.0 and 0.4% respectively. The lower Chicago PMI number will most
likely reflect on the ISM, as market players watch for a reassuring number of at
least 50.
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Please feel free to email me with any questions
you might have, and have a great trading day on Wednesday!
Chris Curran
chrisc@tradingmarkets.com