As of this writing 9AM, the market is trading just below yesterdays OR and appears to be finding a home there.If we open below 1205.5 this would suggest more downside activity. There is a lot of energy built up in the markets and if there are any short sellers left.... they will pounce on any sharp move down. There is support at the 1197-1198 area and 1188-1185 area.
Index options expire on the open and other options expire on the close, Monday is settlement so this usually brings extra ordinary activity.
The bottom line on the open is this...no one knows what big houses who move markets are going to do, nobody can predict it and if you think you can then you are flipping pennies. You will be right as often as you are wrong over time. You get burned when you start flipping fat tails, meaning that you are on a winning streak of being right and start placing heavier bets to suddenly learn you are wrong.
Paper (brokerage firms) will open on the bell either a big seller, big buyer or mixed, the locals will take the other side. If paper sells, they will buy. If its only one house doing the selling the locals will hold their longs and bid the market up and they can do it because they don't have resistance from other brokers who are selling. If several houses are selling they will cover their longs in the mini and join in on the selling, so you see they simply go with the flow of the market.
70% of locals in the S@P pit were there in 1987 so they learned (and survived) that it doesn't pay to fight the flow when its bigger than they are. Good words to live by as a day trader.
Tim Mack
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