Thursday, December 16, 2010

Emini Futures / Triple Witching Day


from the trading desk of CFRN...

Back on the path but BEWARE OF TRIPLE WITCHING! The SP Emini regained its bullish posture after the little hiccup yesterday.  We came into this mornings trading session a little sluggish for technical reasons and disappointing quarterly profits from FED EX (FDX). However positive economic reports gave a reason for the bulls to be optimistic.  At 7:30 CST, Claims for weekly benefits fell by 3,000 to 420,000 last week.  In addition, the Philly Fed added to the strength when it showed manufacturing growing at a more rapid pace, a pace that hasnt been seen since April of 2005. 

Tomorrow is Triple Witching.  What about triple witching?  How will that affect the market?

Triple witching is an event that happens 4 times a year:  March , June, September and December on the 3rd Friday.  It’s when contracts for stock options, stock index options and stock index futures expire.  The general thought is, this day could be more of a volatile day because traders are covering their positions before they expire. 

E-Mini S&P 500 Chart
(Yes. Our members really do have these numbers before the open every Monday.)

Technically, we remain bullish this market until something changes.  Todays close was bullish and we will look for a small retarcement inside today's range to buy.  We will look at the 1233/1234 Weekly Trading Zone and an approximately 50% retracement of todays range as a buying opportunity with our risk being todays low.  In my opinion, if we continue to trade above the 1227 level then I think we rally; run the shorts and their stops out of the market above 1242 and push the SP Emini to the 1246 level.  With alot of energy there is a potential to see our last weekly trading zone or the 1251/1252 area.  Id be impressed if we see that last zone but I think a run through 1242 is realistic.  On the contrary if I am wrong and the 1227 level is broken 1225 "here we come" along with option traders defending there position all the way down.


B. Schlichter / L. Burton / D. Reeves

Ability is what you're capable of doing.
Motivation determines what you do.
Attitude determines how well you do it.
Lou Holtz

Market Profile Numbers for Friday 12/17/10
VAH -  1239.50
POC - 1237.00
VAL -  1232.00

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