This week, as in every three months, we add the equity futures expiration to the mix and that creates a lot of push and pull as hedge funds try to get the best price for switching out of September and into December contracts. If you are a big fund holding long futures positions, you try to sell September high (overhead resistance) and buy December low (support)and avoid as much as possible getting hit with to much premium by rotating at the same time (ES December carries an 11 point premium at this point). A lot of that activity occurred last week, which is why we had that rapid sell-off, but prices seemed to stabilize. Options might figure a little more prominently now, and QQQQ has overhead resistance at 39 and support at 38. Not an easy week to trade, but you have to think like them and understand the flow. Sell resistance and buy support.
This entry was posted
on Saturday, September 09, 2006 at 5:13 PM.
