Last week brought the highest volume traded during its tenure as prompt as September became the sixth straight contract month to rally into expiration- the trend continues. Some fun facts — from low to high expiring September traded a range of $.559 which was the widest weekly range not including an expiration gap since the volatile decline following the Q4 ’18 high. With the expanded range (and volume) traded during the expiring prompts final two days September first extended the rally from the March ’21 low to a new high ($4.217 vs $4.205) and to a new high daily close ($4.184 vs $4.158 on 08/04) and then to the highest settlement since December ’18 that went off the board at 4.715.
Discussed during early August, when September contract first traded to $4.205, market internals did not support a higher high. Volume and open interest were both lower than they had been five weeks before on a rally. Those divergences strongly suggested that although the intermediate and long – term trends were higher the rally was on shaky ground and need a consolidation period (or a correction) was due. September achieved that goal by dropping $.471 (+11%) over the next few trading days, closing higher only three times. While expectations were for further declines were issued here as the reversal day low and weak close on Friday (week ago), are not the actions setting up the brutal blow out to the upside experienced last week.