Another Day, Another Whirlwind: OpEX Nears, Markets Fluctuate

The S&P 500 futures experienced another setback at the upper limit of its trading range, with a rejection occurring at 4,166 overnight. Throughout the month of February, the market has largely traded within a narrow band between 4,166 and 4,100, with occasional temporary deviations.

The recent rejection at 4,166 on the S&P 500 futures has caused a steady decline in the market, particularly ahead of the weekly Initial and Continuing Jobless claims release at 8:30 a.m. Eastern. Although Initial Jobless Claims came in lower than anticipated, it is a promising indicator for the labor market’s growth.

Unfortunately, the U.S. Producer Price Index (PPI) has raised some concerns, with actual numbers surging beyond the median forecast for PPI final demand at 0.4%, registering at a higher-than-expected 0.7%. While the U.S. Consumer Price Index (CPI) did not trigger a significant reaction, the joint impact of these two reports could be worrying for future market trends.

4,100 Continues to Be Stronger Than an Ox

As the opening bell rang, the S&P 500 futures were trading at the bottom of the range, with a strong support level of 4,100 holding steady. Despite a substantial volume of trading during pre-market hours, the lower end of the zone has proven resilient, bouncing the market higher.

The market indexes collaborated for the remainder of the session, driving upward to reclaim lost ground and head towards the upper range of the volatile chop zone that has been prevailing. Spearheaded by the technology sector, the market climbed closer towards a crucial point of control (POC) level at 4,143.

However, a double top was formed at this level, and the next phase of the market trajectory began to take shape.

Market Moves Lower Led by a Big Name

In the final hour of the cash session, the market experienced a broad-based sell-off that saw one stock, Tesla Motor Company (TSLA), take the lead in the downturn. The market was already trending lower when news of a vehicle recall affecting 360,000 units broke, causing further negativity.

Looking ahead to tomorrow, Tesla remains a company that is highly susceptible to sharp price movements, particularly when catalyzed by market developments. In light of the recent recall news, there is a possibility of further downward pressure on the stock should market conditions align.

While tomorrow’s economic calendar is relatively light, it marks the last day of the Options Expiration (OpEX) period. As the session concludes, all option contracts will expire, and institutions will be required to roll over their positions to a later strike. It is worth noting that institutions and hedge funds may have already completed this process, but tomorrow’s session marks the deadline for any remaining adjustments.

Furthermore, with the upcoming President’s Day holiday, the market will be closed on Monday, February 20th, providing a three-day weekend for market participants to rest and reflect on the recent market movements.

Another Range Bound Day Closes Negative

The Nasdaq and the S&P 500 were negative to close the session. The S&P 500 futures closed down 1.35%, losing 56 points, while the Nasdaq futures closed down 1.75%, falling 211 points. The Dow Jones futures followed, closing down 1.23%, a 421-point loss.