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Opening Print and S&P Levels to Watch

Today's economic calendar starts with the Chicago Fed activity index, PMI manufacturing index flash and some Fed speak out of Dennis Lockhart, William Dudley and Richard Fisher. We think it could end up a busy week with T+3 and the September quarter-end rebalance.

On Friday there were some changes made to the Dow. It is called a "switch." This is where the index takes out some stocks and add others. These changes are very important to the three firms being booted (Alcoa (AA), Hewlett-Packard (HPQ), and Bank of America (BAC)) and to the way the public perceives them.

As we all know, the Dow 30 is a "broader market" index and when stocks are removed or sidelined it could have larger economic consequences. The purpose of switches is to maintain the correct weighting within the index, one that reflects the broad market.

This morning Dow welcomes Goldman Sachs (GS), VISA (V) and Nike (NKE) will be added to the Dow, which will make financial stocks the most important sector in the Dow, pushing the sector past the industrial sector and giving financials nearly 35% of the weighting of the average. It is the first 3-for-3 stock switch since April 8, 2004.

Our View:

It was clear that after the Fed no-taper and the pop up to 1725 that the ESZ was extended, and that was why we said sell rallies. But how long will the selloff last? According to the Trader's Almanac, the week after the September triple witching has the Dow down 17 of the last 22 occasions with an average loss of -1.2% since 1990. The end of September is prone to weakness and end-of- quarter portfolio restructuring.

We will see one of our favorite market events, one little known to average investors, T+3, where the mutual funds get to mark up their winning stock positions and sell the losers. The sum total of these factors may not lead to a selloff, but it is unlikely to boost any rallies.

While we lean to still selling rallies, there could see some type of pop either today or tomorrow. We also will be looking for signs of "back and filling" over the next few days.

As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video. We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.

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MrTopStep can be followed on Twitter at

For LIVE futures chat, more information on the 10-handle rule and futures educational content CLICK HERE FOR A SEVEN-DAY FREE TRIAL.

At the time of publication, Danny Riley held no positions in the stocks or issues mentioned.

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AA $12.70 0.00%
BAC $15.31 0.00%
GS $188.06 0.00%
HPQ $31.49 0.00%
NKE $99.88 0.00%


DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

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