As I write this on a dark, rainy and cold (everything is relative) SoCal afternoon, futures flash-crashed lower as they opened in Globex. So much so, I actually had to recompute the major index Levels.
We currently are trading below the lower edge of the SP500 weekly option implied move. Whether this begets dynamic hedging and further selling tomorrow, time will tell. One thing is certain, it remains a phenomenal Trading Regime. In fact, more than 25% of trading days this year have experienced average daily ranges in excess of 45 SP500 points.
Catalysts remain high the remainder of the week in our updated Economic Calendar, but note the testimony of Fed Chair Powell missing. OPEC, Brexit expectations (GS says it will fail on the first try), and Tariff Man cheering the market into a Santa Claus rally are more than enough to keep algos gainfully employed
Bigger picture, we ping Level-to-Level where we observe clearly identified risk confluence zones for 2018.
Critical as well, but not shown and mentioned in other notes are Financials (XLF) at the 26.50 Level. Selling accelerated Tuesday when that Level was breached to the downside.
Tactically, we should consolidate and recover toward 2734.50, within the option implied move.
As always, if what we anticipate fails to occur, then the opposite move is more reactionary and our Levels provide the range of possibilities.
All the best,