After trying for months to close above 2400, the S&P 500 futures did so last Thursday and has been trading in a range since then, as the low volume markets have been quiet before and since Memorial Day.

The 30-minute candlestick chart below covers almost the entire last week of trading and highlights an established support area between 2403 and 2408 and resistance area between 2414 and 2418.

So the question becomes, will this market break out of the range today? Here are some things to consider:

This morning’s calendar before the open features preliminary employment numbers before tomorrow’s non-farm payroll; and after the 9:30 EST open, the ISM Manufacturing numbers will be released. Each of these reports have historically been enough to give the market some response, although recently the S&P 500 has moved very little in response to these reports; however, traders should be aware.

Also worth considering is that as of 6:41 am EST this morning, all of the European markets are open; and as there seems to be a move for higher prices and with today being the first day of the month, it is quite possible that there is support in the equity index markets.

Given this, our view is to place more of an emphasis on the support area of 2403 to 2408.  The important weekly pivot we follow is at 2405.50, and the daily S1 support level is at 2406.00, lending a further hand of support.

In this support area, we like trading at regular size, looking to buy near-the-money binary options that will give close to a 1:1 return on risk using hourly or daily timeframes. We don’t like weekly options in this case due to the NFP number tomorrow.

Lastly, if the S&P 500 futures have moved below the 2414 to 2418 resistance area at the end of the first hour (10:30 a.m. EST), we are willing to sell at-the-money binary options in this zone with no less than a 1:1 return on risk; however, our approach today will be to sell the resistance using a smaller-than-normal size risk.  For example, if our normal risk size is two options, then we would only sell a single option at the resistance area.


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