Bickering over the latest gargantuan spending plan out of Congress overnight seems to have torpedoed a 25 point rally in the S&P 500 index during the Globex session. The index achieved a new, all-time high of 4723.75 before backing away after Europe opened. Not only did the rally reverse, but the market also went back down that 4700 hill that overnight traders had conquered, following yesterday’s regular session, which saw a turn higher after selling off at the open. The market is trading at 4687 at this writing.
Last night’s highlight was an 8 hour plus floor speech by house minority leader Kevin McCarthy, the longest on record. For now, the vote has been delayed, but the stock market is not waking up happy. The overnight range was 40 points and absent a turnaround before the open; we will gap down (not a True Gap) to the bottom of the range. The low of the range is 4685.
Today is monthly and weekly options expiration. Next week is the holiday trading week, which is likely to have light volume. I will be out next week, so there will be no outlooks until next weekend. Trading could be difficult today, with monthly and weekly options expiration and the Washington D.C. rhetoric. Need I also mention, there is a lunar eclipse today. Perhaps that is the explanation for everything. Put on your Tin Foil Hat for that one.
We don’t see many Globex sessions like this. If you are a swing trader and holding, I would be reticent to hold if we close below yesterday’s low, which sits near our old, reliable, downside reference point of 4667 (4667.75 to be exact. Closing candles above yesterday’s high at 4705 might give us a chance to visit the all-time high established overnight at 4723.75. It is rare for an important high to be established in Globex and not eventually revisited in the regular day session. Can we do that today? I really don’t know.
In fact, this is one of those sessions where (given the options expiring and the Washington D.C. battles) it is tough to call. Maybe the whole country needs a holiday. It has been a strange 18 months for all of us. I always remind myself that we have more in common than differences if we would admit it from time to time.
Have a great holiday!
A.F. Thornton