Option Investor
Index Wrap

Up, Down And Sideways

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       10-01-2001          High      Low     Volume Advance/Decline
DJIA     8836.83 - 10.73  8850.67  8732.14 1.36 bln   1295/1871
NASDAQ   1480.46 - 18.34  1491.45  1458.41 1.50 bln   1394/2489
S&P 100   533.40 +  0.05   534.34   526.88   Totals   2689/4360
S&P 500  1038.55 -  0.22  1040.94  1026.76             
RUS 2000  397.60 -  1.79   404.87   393.00 
DJ TRANS 2142.16 -  2.39  2196.33  2119.77 
VIX        34.78 -  1.16    36.55    34.71 
Put/Call Ratio      0.94

Up, Down And Sideways
Austin Passamonte

Those are the only choices a market has to make for which way will it be on any given day. Today the markets chose all three.

We saw a drop at the open on an orderly drift down and complete recovery in the same orderly manner to session highs before settling a bit lower to close. In other words, market action went nowhere slow.

This was to be expected in front of the FOMC event tomorrow with our ninth-straight interest rate cut a virtual certainty, only question being how far the Fed decides to go. Many CNBC pundits are already guaranteeing a 50-basis reduction and rest assured the market priced that in. It will be met with a stifled yawn while who knows what might happen if Big Al plays it close to the vest and only lops minus 25-basis instead.

Big picture: markets have moved wildly for most of the past ten sessions prior and are tired. Possibly even exhausted, so we'll live up to the aged adage of "large range days breed small range days" as the endless cycle continues. Would be nice to see one session open flat and have the Dow rise or fall 300 points from there instead of those worthless gap-open sessions, but we'll get exactly what the markets give us and no different.

(Daily Charts: Dow & NDX)

Very little changed today. If we draw our Dow chart pattern in the manner pictured above, it shows a bearish ascending wedge with price action resting on for support. Should the 8,700 area give way, we might wander back down considerably lower than that.

The NDX looks weak to non-descript and will continue to lag the leading indexes for months to come, so there isn't much to glean from here.

(60/30 Minute Charts: SPX)

Not much to work with here, either. Sideways stochastic values and bearish chart patterns are what we see, but more choppy action is likely in store for us until a catalyst emerges to push price action further ahead.

(60/30 Minute Charts: QQQ)

The Qs are actually looking stronger and could move higher or at least hold their ground. Neutral wedges give us measures to monitor for a break either direction tomorrow as well.

We'll Be Brief
This may indeed be one of the shortest Wraps I ever scribe, but there simply isn't much to say. The markets went nowhere and did nothing of consequence at all today. Just sideways noise, and we won't have a clear picture of direction until at least Tuesday afternoon. I don't expect the FOMC event to spawn much reaction either way, as their ninth time is certainly not a charm. No real drama here.

I believe the next catalyst to push market action if the Fed doesn't disappoint tomorrow will come from something that seems obscure at the time, a big-cap warning or guiding higher OR a new global unrest development for better or worse. Traders will begin with Tuesday's action past 2:15pm EST and go from there.

Long-term charts are mixed. Markets moved sideways with no real evidence either direction today. As many technical reasons exist to be bullish as bearish. Nothing to do but watch & wait to react appropriately from there.

Seems like it's either all or nothing: wild volatility or dead flat days. Each makes trading more difficult than we'd like it to be, but that's the game we play in for now. At least one or two sessions should cover lots of ground this week and let's hope to catch them on the right side if we can!

Best Trading Wishes,

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