S&P 500 Emini Day Trading Gap Wednesday September 16, 2009

S&P Emini 500 Futures opened this morning at 1045.25, a 1.5 point gap up.  The gap was short lived and was filled in the first minute of trading.  After a brief spike up on heavy volume, the index fell over the next 35 minutes on even heavier volume, and bottomed out for the day at 1038.25 at the 10:20 candlestick.  Prices entered a slow up trend over the next 4+ hours, retraced the morning drop, then moved sideways until 2:40.  The index broke through the supporting trend line and headed down a couple of points before rallying at 3 o’clock to the day’s high, 1052.00.  Traders took the index back down most of the late afternoon rally and closed at 1047.75, up 4 points on the day.  This will be the 8th up day out of 9 for the Emini Futures, this time on strong volume.  2.5 million contracts traded today, well above the 50 day average volume of 1.8 million contracts.  The 12.75 trading range was below the 15 point average.  While the longer term charts, the daily and weekly, are still showing an overbought condition, the intra-day 3 and 5 minute charts finished today with an oversold indication.  What does that mean to us as day traders?  Tomorrow will tell the story.  We may see a rally in the short term out of the oversold condition overnight, or, tomorrow morning.  Longer term though, we still have to be alert to the possibility of a sizeable correction.