Let’s face it traders… We may like all the big ups and downs, but unlike a few weeks ago when everyone was concentrating on Greece, China has become a much bigger issue, with much larger implications. And like I said in yesterday’s Opening Print; big pick-ups in volume usually mean something big is about to happen.
NYSE: ‘Technical’ Glitch or Cyber Breach?
Tuesday’s total volume in the ESU15 was 2.5 mil contracts. Its going on 11:30 CT and there are already 1.1 million ESU15s traded. The futures opened sharply lower, rallied, sold off, rallied again, and are starting to test the day’s low at 2047.25. After running some sell stops under the day’s low, the S&P futures (ESU15) made new lows at the 2043.50 level while the NYSE was still shut down due to “technical issues”. This only added more anxiety as investors and institutions were unsure of how the NYSE would settle its stock prices at the end of the day.
After a 5 hour delay, at 3:05 ET the American Stock Exchange (AMEX) re-opened, and at 3:10 the New York Stock Exchange (NYSE) resumed trading. Slowly “bids and offers” started showing up, but as the NYSE opened, the S&P futures, which rallied mid-afternoon, fell to new lows. In the first 5 minutes of trade the NYSE did over 50 mil shares but as the NYSE played catch up with the other stock exchanges, there were several late day sell programs that hit just before the 2:45 CT cash close and the 3:15 futures close. Overall volume in the S&P futures was lower at 2.38mil contracts, but we think that was due to the NYSE shut down.
PitBull Thursday / Friday Low The weeks before the July Expo
They say some of the old trading rules do not work as well as they used to, but the PitBull Thursday / Friday low the week before the option’s expiration has been one that has been working for years, and I get the feeling it is going to work this time too. Let’s face it… The news is out, and based on the increased volume I think everyone is way too short. At this stage I think it is fair to say that no one is actually winning. The longs have been forced to roll lower, or protect, and the shorts have been pressing their downside bets. It’s my guess they both end up getting chased out.
CHINA
Last night the Chinese markets made their biggest gains in 6 years. The news said Thursday’s rally was about restoring market confidence. In turn this helped push European stocks higher, which has pushed the S&P futures back to the 2060 level, up over 20 handles this morning.
At the end of the day, I still believe that the S&P is the world’s leading stock index. Sure China and Greece can whip it around, but in the end, it will be the S&P that prevails. I admit that the downside gaps are a concern but I also have to remind you about one of MrTopSteps other rules that traders should be on guard for, and it’s called… It takes days and weeks to knock the S&P down and only one to bring it back. I don’t know if today is the day but I do know it’s coming….
In Asia 6 out of 11 markets closed higher, and in Europe 11 out of 12 markets are trading higher this morning. Today’s economic calendar includes the Chain Store Sales, Narayana Kocherlakota speaks, Jobless Claims, Lael Brainard speaks, EIA Natural Gas report, 3 and 6-Month bill announcement, Esther George speaks, 30-Yr Bond auction, Fed Balance sheet, and Money supply.
Our View: Yesterday I started thinking that maybe I am all wrong, that the S&P was acting so bad that maybe it was going to 1980 or lower, but then I thought to myself, that despite the ongoing weakness, the ES is holding the 2050 area. With all the churning and burning going on and not really making any downward progress my gut still says there will be a stab at the 2088 level, or even higher, at some point. China firmed up and the Greek banks are running out of money.
Its a never ending teeter-totter but I get the feeling that the Greeks situation is coming to a head. That said our view is the same; sell the early rallies and buy weakness. They ran the downside stops yesterday, that must mean they run the upside buy stops today.
July Options Expiration Stats
As always, please use protective buy and sell stops when trading futures and options.
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In Asia 6 of 11 markets closed higher : Shanghai Comp. +5.76%, Hang Seng +3.73%, Nikkei +0.60%
- In Europe 11 out of 12 markets are trading higher : DAX +1.53%, FTSE +0.98%, MICEX +0.56%, GD.AT +2.03% at 7:00 am CT
- Fair Value: S&P -7.77 , NASDAQ -9.61 , Dow -91.57
- Total Volume: 2.38mill ESU and 7.3k SPU traded
- Economic calendar: Chain store sales, Narayana Kocherlakota speaks, Jobless claims, Lael Brainard speaks, EIA Natural Gas report, 3-month Bill announcement, 6-Month bill announcement, Esther George speaks, 30-Yr Bond auction, Fed Balance sheet, Money supply. >
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