Short Term Trading Weekend Lounge: 18 - 20 Sept, page-8

Happy Friday Traders,

Since we have been running along last Friday's ES point of control area, there are some SPX levels to watch on any further weakness this week and next.  Heavy September stock and index derivatives expirations will influence today's session and bulls want to keep a handle on 3340 in the regular daytime session because intraday participants will go into caution mode below this level. NQ futures are still under the 50-day average and RUT and RTY futures have bounced at the 50-day moving average.  Friday's high-volume ES node is 3226 despite the much higher settlement.   ES overnight futures are balanced around 3350 and slightly net short.  That area might be a point of contention today.

Monday and Tuesday's US upside action contained substantial short-covering.  Wednesday's volatile FOMC press conference-related trade looked like a halfhearted attempt at a breakout from a seven day consolidation area around 3420.  The DXY still does not know what to do with itself as the market digests what some say was vagueness.  A test of the bottom of that area around 3330 during daytime took place on Thursday and that leaves things sort of undone as far as that balance area goes. The SPX 50-day average is now about 3338. Any weakness on strongly negative internals below the ESU0 filled gap from 3300.50 to 3311.25 or last Friday's ESZ0 low of 3298.25 and then 3390 will put the bottom of the December contract's variation on that gap into focus.  The bottom of that gap at SPX of 3255 would be an area of scrutiny that the bulls do not want to lose. Short term traders would likely go into high caution mode there, especially if accompanied by a run higher in implied volatility and hedging.  The weekly upside resistance points are similar to what they were last week, with an intraday focus on SPX 3370 and the bottom of yesterday’s ES gap down at 3365.25.  SPX 3355 should be another focal point.  Again, a wide range of derivatives on stocks and indices today can be a volume and volatility rich event that will modify assumptions. Got your cable, @ammie…will check polling and report back...