Whether the man will buy, sell or hold today, that is the question. SPI futures did a range of 74 points Friday night, high being 6071, low being 5997, with a close on Saturday morning of 6006, down 65 points on high volume of 16,093 contracts. Based on that large move, my high resistance lines are 6099, 6080, 6070, 6062, 6053 and 6043, low support lines are 5951, 5969, 5979, 5988, 5996 and 6006, with the pivot point at 6025. There are gaps to the downside at 5980, 59785968, 5959, 5947 and 5937, and gaps to the upside at 6014, 6033, 6036, 6042, 6057, 6083, 6100 and 6101.
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Regarding the SPI, what is of particular interest to me, is the issue of backwardation - how many points is the SPI behind the XJO ? Reasons are, as we are now in February, usually, the discount will decrease, that is, the SPI would move closer to the XJO. However, as this contract was trading 40 points behind the XJO and whilst I was gone (only about 2 weeks), that discount moved from 40 to 60 points. So, did SPI know something XJO didn't ? And given the drops on Wall Street, will the 60 points go to 70, or will it go back to 40. We shall see, but it is important, as trying to calculate the open and pivot points depends on knowing the correct backwardation numbers. As far as today goes, XJO closed Friday at 6121, so SPI is now 6006, so if 60 points backwardation, SPI is predicting XJO to go down .90 pct, and if 40 points, SPI is to go down 1.22 pct. Given the over 2 pct Wall Street fall, is this enough, or is there more to go ? I'm short, but when to take it out and go long, decides whether you make money or not, so I'll be keeping an eye on that backwardation Cheers and good luck.
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