U.S. Indices Open Flat Following Lagging PPI Numbers

It has been a muted open on Wall Street, with both the DJIA and S&P 500 trading near flat. The markets are taking a wait-and-see approach thus far, following several U.S. inflationary releases. A lagging set of PPI (August) numbers and MBA Mortgage Applications (Sept. 7) appear to be impacting action.

Be on the lookout for choppy trading conditions over the next couple of hours until the U.S. indices choose a direction for the day. Also, remember that tomorrow brings the release of U.S. CPI numbers for August. The numbers are projected to come in unchanged from the previous release. If they outperform expectations, then a stronger case may be made for that fourth FED rate hike in December. Subsequently, equities will likely exhibit enhanced volatilities.

E-mini S&P 500 Technicals

After a strong electronic open, the September E-mini S&P 500 futures have retracted back into Tuesday’s range. For now, this market appears to be tightening.

Here are the support levels to watch for this market as the day unfolds:

• Support(1): 62% Retracement, 2873.50
• Support(2): Bollinger MP, 2872.00
• Support(3): Daily SMA, 2870.00

Bottom Line: Long scalps from support at 2873.50 are an affordable way to play today’s action. With an initial stop at 2870.75, this setup is worth 8 ticks using an ultra-tight 1:1 risk vs reward scenario.

On a side note, if you are trading the September E-mini S&P 500, rollover to the December contract is scheduled to occur in the next 24 hours. It is possible that we see a flurry of action toward today’s closing bell as institutional players balance their books and begin to look forward.