Thursday, September 16, 2010

Emini Futures Trading / Bullish Breakout

Thursday September 16, 2010 / 6:00PM PST
Bulls break through resistance on S&P 500 Emini Futures 1121/1122 Weekly Trading Zone at the closing bell. 

Repeated attempts this week to break through resistance at the 1121/1122 Weekly Trading Zone all failed spectacularly until the final few minutes of today's session. In fact, what made this breakout of special interest was the fact that Wall Street traders had already shuttered their windows, locked their doors and headed for the train. It happened in that quiet period from 4:00-4:15pm Eastern when stocks go silent and futures grind aimlessly away back in Chicago without any real direction or purpose. At the close of business in New York, the December S&P 500 Emini contract was trading 1120.25, a good 3 ticks below resistance. Once the whistle finally blew in the Windy City, price had spiked to 1124 and closed the session at 1122.25... a tick above the hallowed 1122.

Why the last minute push? None of the guys in the mail room seemed to know so I raced upstairs right into the office of our CGO (Chief Guessing Officer). He stood by the window, his vacant stare fixed on some distant point across the harbor. As the afternoon shadows darkened the lines in his deeply creased brow, he seemed somehow less confident than I remembered him... shoulders slightly slouched, weary somehow. Less a financial wizard and more a man as bewildered by his own reflection as by the betrayal of his precious shattered trading zone.

"What's up Chief?" I quipped, hoping to lighten the mood. He remained silent, draining the last few drops of '37 Glenfiddich from the glass he held in his weathered hand. He mumbled something under his breath about "Triple Witching and how they could all go to....". Then the glass just slipped from his hand and bounced off the hardwood floor once, twice, and then shattered at his feet. I backed quietly out of his office. Real respectful you know. I even made sure the door closed without a sound. After all, once a man's zone is broken, there's not much left...

Triple Witching - What is it and why should you care? 
Tomorrow, Friday, September 17, will be Triple Witching Day. Stock index futures, stock index options and stock options all expire on the 3rd Friday of March, June, September and December of every year.

There can be a sense of unbridled chaos in the markets as traders in the expiring contracts scramble to close out their positions and in doing so, inevitably push the market either up, or down, and often - both. Typically the majority of the scramble is seen in the final hour of trading on Friday. If today's late action is any indication of what's to come tomorrow, this could be one of the most volatile Freaky Friday's we've seen in quite some time.

Historically, the week following September's Triple Witching has a high probability percentage of being a down week. Wherever we close tomorrow, the money to be made over the next few days looks to be had on the south side of the street.

Weekly Trading Zones / Daily Review

S&P 500 Emini Futures / ES

Dow Emini Futures / YM

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