What The Market Is Susceptible To
Tuesday turned out to be
a news-driven session as the September S&P futures (SPU and ESU)
opened with a small 4-point gap to the upside due to hype around some Chip stock
upgrades, and giving a good probability of a “gap and trap.” Merrill Lynch was
a buyer for a change off the open, but got done fast, and let the locals sell
the market down to the Daily Pivot at 980.50, which cracked to fill the gap at
978. The futures looked like they were going to give a tight range session after
Monday’s nice range until a rumor (which turned out to be true) hit the market
that both of Saddam Hussein’s sons had been killed. Shorts raced to cover as
the contract broke to a new session high over 983, and also broke the neckline
of an inverted head & shoulders pattern on the 13-min timeframe (see chart).Â
The contract broke again to a new high over 989 as more news was released. The
futures were holding most of their gains through the lunchtime lull until more
news hit the wires that the Eiffel Tower was on fire! The contract sold off
sharply in fast market conditions but bounced off the Daily Pivot before
grinding back up to the highs. Â
The September S&P 500 futures closed the session
with a gain of +8.75, and in the top 1/3 of the daily range. The contract
posted an inside day, reversing off its 50-day MA and the lower end of its
recent trading range, and still holding the lower trendline of the symmetrical
triangle. Volume was higher on Tuesday’s reversal, but not enough to push the
SPU and ESU back above their 20-day MA’s. With no economic reports until
Friday, the market is going to continue to be susceptible to any news-related
swings.
                                   
Daily Pivots for 7-23-03
| Symbol | Pivot | Â Â Â Â Â R1 | R2 | R3 | S1 | S2 | S3 |
| COMP | 1700.86 | 1715.58 | 1725.05 | 1739.77 | 1691.39 | 1676.67 | 1667.20 |
| INDU | 9123.39 | 9209.48 | 9260.51 | 9346.60 | 9072.36 | 8986.27 | 8935.24 |
| NDX | 1255.07 | 1267.96 | 1278.30 | 1291.19 | 1244.73 | 1231.84 | 1221.50 |
| SPX | 984.83 | 993.57 | 999.04 | 1007.78 | 979.36 | 970.62 | 965.15 |
| ESU | 983.50 | 992.75 | 998.75 | 1008.00 | 977.50 | 968.25 | 962.25 |
| SPU | 983.43 | 992.67 | 998.53 | 1007.77 | 977.57 | 968.33 | 962.47 |
| NDU | 1257.67 | 1273.33 | 1284.17 | 1299.83 | 1246.83 | 1231.17 | 1220.33 |
| NQU | 1256.33 | 1275.17 | 1287.83 | 1306.67 | 1243.67 | 1224.83 | 1212.17 |
| BKX | 892.61 | 902.73 | 909.37 | 919.49 | 885.97 | 875.85 | 869.21 |
| SOX | 386.40 | 391.32 | 394.44 | 399.36 | 383.28 | 378.36 | 375.24 |
| QQQ | 31.23 | 31.61 | 31.87 | 32.25 | 30.97 | 30.59 | 30.33 |
| SPY | 98.83 | 99.75 | 100.33 | 101.25 | 98.25 | 97.33 | 96.75 |
Fair Value & Program Levels
Fair Value — (0.98)
Buy Premium — 0.22
Sell Discount — (2.48)
Closing Premium – (1.31)
Please feel free to email me with any questions
you might have, and good luck with your trading on Wednesday!