S&P 500 Emini Day Trading Gap Tuesday August 18, 2009

S&P Emini 500 Futures had a big 18.50 point gap down this morning.  Trading opened at 984.25, moved up slightly to 985.00, then headed down.  The 985 price was the high for the day and quickly moved down 7.50 points to 977.50 by 9:50 market time.  The 9:50 candlestick formed a nice hanging man formation, and signaled the start of a retracement of the morning drop.  The 977.50 price proved to provide support for the rest of the day.  The index pierced that level a few times, but supported price closed above 977.50 after each test.  At 11:20, prices once again came off the low and rallied 75% of the morning range, then entered a ragged trading channel for the rest of the day.  A series of lower highs and lower lows ensued, with prices sagging to the low of the day, 976.50, just as the last 15 minutes of trading began.  The close was 978.25 and came at the lower end of today’s 8.50 point range.  The 14 day average true range for the Emini Futures is 18 points.  Volume was above the 1.82 million contract average at 2.25 million contracts.  Today’s action marks the first close below the prior day’s low since July 8th.  If prices follow through to the downside, it could be the beginning of an anticipated correction.  The move down also filled one of our open gaps.  The open gap from Friday, July 31st of 983.50, which has been underneath our prices, has been replaced with today’s overhead unfilled gap of 1002.75.