Monday's Market Minute: Monthly Sell-Off For S&P Futures Today?
S&P 500 futures have followed a curious pattern lately; every month since May, the contract has seen a sharp sell-off between the 17th and 19th days of each month. Why exactly is unclear, but this time the window in which the sell-offs have taken place is roughly near monthly options expiration. Although heightened volatility is not uncommon during options expiration, such ferocious sell-offs happening with such regularity is unusual.
As today is October 18th, traders may wish to exercise extra caution when assessing markets this morning. However, the technical portrait portrays limited evidence the /ES is on the verge of a sell-off. The contract saw bullish MACD and Parabolic SAR crossovers last week, while RSI is making new recent highs with price. However, it also bears noting that price last week stopped short just below the September 24 intraday highs of 4472.
The zone between the 50-day Simple Moving Average and the 63-Day Exponential Moving Average often has been a buying zone for most of the past year, with the supportive relationship starting to break down during last month’s sell-off. Price is now holding just above the 50-SMA, currently near 4427. However, it also slipped below the Linear Regression 50% Channel’s lower boundary, near 4451. As such, watch for support around the 63-EMA near 4380
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