Why We May See A Game Of Ping-Pong
The December S&P 500
futures (SPZ and ESZ) opened Wednesday’s session with a -2.25 point
gap to the downside after working off some of Tuesday’s excess. After filling
the gap in the first 45 minutes, the futures churned in a narrow 2 point range,
holding its daily 3.50 point range. A lunchtime move to the high of the session
was halted supposedly by news that FNM was going to correct computational errors
on their earnings report. The futures reversed sharply to the upside when it
was realized that the corrections would not affect FNM’s earnings statement,
only to run out of steam again and settle nearly unchanged.
The December S&P 500 futures closed Wednesday’s
session with a gain of +1.50 points, and closed in the upper 1/2 of its daily
range. Volume in the ES was estimated at 569,000 contracts, which was behind
Wednesday’s pace and below the daily average. On a daily basis, resistance
continues to be at the Oct. high, with a confluence of support at its 10-day and
20-day MAs in the 1,038 area. On an intraday basis, the 60-min chart hit the
bearish Gartley reversal area that projected a double top in the 1,047 area, and
remains valid as long as Wednesday’s high of 1,048.75 holds. The 13-min chart
broke a symmetrical triangle and was able to close the session back above 15-MA
support at 1,046.25. A break of that support sets us up for a game of ping-pong
between 1,046 and 60-min support at 1,042 (see chart).
Thursday morning at 8:30 am ET gives us both Q3
GDP, with its consensus of an increase to 6.0%, and Weekly Jobless Claims, with
its estimate for a small drop to 385,000. Just a reminder that most mutual
funds will close out their yearly books on Friday, so the futures may oscillate
in this range until at least then.
Please feel free to email me with any questions
you might have, and have a great trading day on Thursday!
Chris Curran
chrisc@tradingmarkets.com