We are going to make this short and sweet: The ranges are going to get smaller and the volumes are going to drop over the next few weeks. Maybe during next week's two-day Fed meeting we see a pickup, but with the DEC roll in full swing, it's our guess most of the volume will come from the spreads. After the roll there will be an even bigger withdrawal from trading as we enter the Christmas holiday and New Years. Most of the big banks and hedge funds have already shut down for the year. What they do not want is a big selloff at year end. Do you know why? Because of their year-end bonuses, thats why.
In Asia 11 out of 11 markets closed lower and Europe is trading modestly higher. Its hard to get excited about the markets right now; they are too high to buy and too firm to sell. It's possible the selling we are seeing on the close every day continues right into the end of the year. That said, the S&P acts tired. Based on the volumes it also doesn't look like many people are trading. Our view is to sell the early rally and buy weakness. It is looking like the algos are targeting the sell stops under 1801.
As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.
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