Saturday, September 18, 2010

Emini Futures Trading / Triple Witching

(QQQQ)(DIA)(SPY)(.SPX)(GLD)

Saturday September 18, 2010
Triple Witching A Non-Event

September's Triple Witching Friday failed to deliver its traditional volatility spike. In fact it did just the opposite - It sucked the life right out of the market. Granted there was some excitement at the breakout close on Thursday which carried over into the Globex session, but once the U.S. Markets opened it became a real snooze fest. Please note a recurring theme here lately - The engine that powers the global markets is found in Rickshaws and Hackney's, not Limos on Wall Street.

The December S&P 500 Emini Futures Contract opened Friday morning at 1125.75 but within the first 15 minutes had dropped back below our Weekly Trading Zone at 1122. The low of the day was put in by 10:15 EDT at 1117. As the day progressed any hope of volatility vanished. The action was sideways in a tight 4 point range for the remainder of the session.

Although Friday's action was quiet, it was informative nonetheless. In fact what we see is the potential for a gap lower on the open Sunday evening. If there is by chance upside traction on the overnight, we would expect the rally to be met with resistance on the Wall Street open. In the final hour Friday, 249k contracts changed hands inside of a 3 point range which is not a footprint left by retail traders. We closed the week with several sell signals on our proprietary charts. One of course was the inability of the market to break and hold above the 1121/1122 Weekly Trading Zone. In all fairness though, we should point out that the Dow Emini 10,515 Weekly Trading Zone did break and hold.

And then there's this little tidbit - On September 1st, price gapped open above the 21 period ema on the hourly chart. Since then the 21 period ema has not been breached. That was 144 - 60 minute intra day candles ago. Also Tuesday is September 21st. For those who follow our work closely we wrote a few weeks ago that we believe this period will be of importance not only in the markets but the world at large.

We open the week with a report from the National Association of Home Builders. Tuesday we get Building Permits, Housing Starts and the Fed will announce their decision on Interest Rates. In the same breath I'm sure, we will also be informed that the economy is still slowing. Really?   If that weren't enough, on Thursday we get Unemployment Claims and Existing Home Sales. Did I also mention that historically the week following September's Triple Witching is a down week? Well there you go...

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Pray Hard & Trade Safe!
CT

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