With the wild premarket and intraday fluctuations in the S&P 500 index futures, it is important to focus on the index’s actual closing price. By following the closes, as opposed to the daily highs and lows, one can gain a better perspective of whether the index is gearing up for a streak one way or another, or is in a consolidation mode before its major move.
From this technician’s perspective, the index may take a breather for a few different reasons. The first one, the index will be going through “rollover” this week. This takes place on a quarterly basis as one contract gets set to expire and market participants need to either “roll over” their current positions to the new contract (December to March) or let it expire. This activity tends to create “air pockets” as the volume begins to be divided between the two contracts. That certainly describes the price action in the last two sessions.
The other reason the index may be in a holding pattern is that the Federal Reserve Bank will have its final meeting of the year next week. At that time, it will be determined how “hawkish” the Fed will be moving forward and to reinforce its commitment to fighting inflation.
While the March contract becomes the front month on Thursday, most of the volume will be in the December contract until next Monday.
In the absence of bad Omicron news and actually some positive developments over the weekend, the index added 52.50 handles to close at 4590. That close is just above Thursday’s close (4575.75), making the index merely a “wash” over the last two volatile sessions.
Metaverse Platforms (NASDAQ: FB) put on the “happy” face to be the biggest gainer of the top components. The issue ended a four-day losing streak by adding $11.03 or 3.6% to close at $317.87.
That was triple the cash index’s gain of 1.17%.
Nvidia Corp (NASDAQ: NVDA) was the biggest loser of the top components. For the session, the issue declined by $6.56 or 2.1% to close at $300.37.
Monday’s PreMarket Prep Plus: “Briefing With Brent”
Brent Slava joined the broadcast with an upbeat assessment of the weekend news flow. Read more about the Briefing here.