SPI200 Commentary Follow or Fade! SPI had another weak day...

SPI200 Commentary

Follow or Fade!

SPI had another weak day Wednesday as it sold off from the open at 5720 down to 5665 in quick fashion. The rest of the day saw SPI linger around the 5700 level. Sycom saw a dip down to 5670 during the FED meeting but recovered and closed just above 5700. Sep SPI expires this morning and is based on the OPIC of the XJO, so DEC becomes the front month contract from today. As mentioned for the last week or so there was a lot of open interest on the 5700 strike of the XJO options and so we should see a close around that level this morning. FED met expectation last night and will start reducing their balance sheet by $10B per month from October, so it will be interesting to see how the equities react in a reverse QE environment. Bonds around the world are starting to fall which means they are pricing in higher interest rates. Since a lot of Aussie investors are looking for yield on the XJO the bond proxies like TCL, SYD and REITS are starting to fall again. On the other hand higher rates are usually good for commodities, which may mean even more sideways action for the XJO. For todays trading we should see the SPI hold up around 5700 till expiry is done then I think we'll see a test of yesterdays lows. For todays trading I am looking to buy dips around 5660 and sell rallies around 5710

SEP SPI




DEC SPI