SWITCH DAY – LET'S ROLL!
Ah, the dreaded “switch” day! Hate to say it but the Thursday before a quarterly expiration was never fun. If your desk was not set up close to the S&P spread you had to run guys back and fourth from the desk to the spread. It was a mess. Customers buying and selling in both the DEC and the MCH out rights and doing “rolls” at the same time caused massive confusion. In its heyday over 600k big S&Ps had to be rolled, the pit was packed, cash was flying and the boys were fighting like mad. Now a days the ROAR has been over taken by the hum of a computer. As we head into the Christmas Holiday we do so holding or our breath. Over a month ago MF Global pulled what they did and in the last few days Citigroup cut 60% of its floor staff and Cantor shut its whole floor operation down. All this as the great American shrink down continues in full gear…
Its 5:30 am and the SPZ is down 3.6 handles at 1260.30, crude is up 31 cents at 100.80, gold is down $3.20 and the EC is down 6 at 133.90. In Asia 10 out of 10 Asian market closed lower (Heng Seng down 0.69%) It's a mixed bag in Europe with 6 out of 13 markets trading higher (DAX up 0.05%) It seems things are somewhat flat line this morning as the leaders of France and Germany hope to push fellow European conservatives today in their latest bid to save the euro currency from collapsing. Additionally, there is talk that the ECB could cut interest rates for the second time in 5 weeks.
The main headline this morning is “SPX: US Stocks Futures Drift Ahead of ECB Summit” Today's economic calendar starts with the jobless claims number at 7:30, Bloomberg Consumers Comfort Index at 8:45, Wholesale Trade at 9:00 and the EIA Nat Gas Report at 9:30. It's just after 6:00 and John Corzine just released several statements ahead of to his MF Global hearing in-front of the U.S. House Agriculture Committee hearing today.
Our view? We are still looking for that PIT BULL Thursday / Friday low before the expiation. Will it happen? It could but we need to get a better look at the numbers and how things play out in Europe this morning. It's our guess the markets start out slow and pick up as the news hits the tape. Lots of moving parts to pay attention to today. We learn to selling the early rally then looking for a good spot to be a buyer.
As always PLEASE use stops and keep an eye on the 10 handle rule…
VOLUME 31k SPZs and mil 2.72mil ESZs traded
SPREADS: 14.6k SPZ/H and 105 SPZ/M spreads traded
FV: S&P, NASDAQ
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1266 3X TOP THIS WEEK Nice DOJI
Wednesday's trade started with 360k ESZ and 1.3k SPZ traded on Globex, trading range 1245.25 – 1261.75. RTH opening range was 1252.20 – 1252.80 serving as the early morning high which was followed by sideways to lower trade down to 1244.10 LOD at 9:32CT. Jason Kirnbauer Options [Dec-07 08:38:45 AM]: CBOE trade: SPX dec 1300 calls paper bot 10k for 3.90. Following the low, the spoos stepped higher to retest to retest and convert the opening range by 10:25 and on to 1258.50 mornings high. 1.7M ESZ and 3k SPZ traded in the morning with 13k calls and 7k puts traded in the S&P futures options. Then the dueling headlines hit the tape over the next hour or so. Mid afternoon the S&P ratings agency went to task on the European Union including some more big banks including BNP Paribas. On the news, the spoos only broke from 1256 to 1251.50 area and by 2:20 was back at 1256 and caught a real bid hitting out stops above 1260 as the G20 announced they were CONSIDERING $600B IMF LENDING PROGRAM FOR EUROPE. After trading 1266.50 HOD the spoos retested the 1260 area and held. The cash imbalance showed $250M, 1261.50 traded on the cash close before settling at 1264.00 up 9.1 handles.
In the end they took another stab at the 1266 level again and sold off. How many times do you think that can happen? Bottom line is the market are taking the bad news and making good of it again.
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ECONOMIC CALENDAR: http://mrtopstep.com/economic-calendar
CONTRIBUTORS' CORNER
SPX CHARTS ~~ Bill Blount, Tepid2
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