It had to happen. It was just a matter of time. What goes up, must come down, and after 8 days of higher closes, the S&P 500 futures (ESU15:CME) came down.
So what should we talk about today? Should we talk about how Apple shares fell hard after the earnings report? Or should we talk about the Dow being weighed down by IBM and United Technologies second quarter results? Or should we talk about the decline in the dollar and the continued slide in gold? To tell the truth I don’t want to talk about any of that. I’ll leave it to The Wall Street Journal.
I am here to talk the S&P and what happened yesterday. In the Opening Print, I talked about the S&P been up eight days in a row, overbought and over extended. Sure some weak earnings may have added some weakness to the S&P futures, but you know what? The ESU15 was going down either way, and the main reason is, the S&P got tired. There were no more upside buy stops to run, but the market was loaded up with downside sell stops. As we all know, when the S&P rallies after it squeezes out all the shorts, it waits until it has gotten the public long into the rally, and then tops out.
APPLE LOSES $60BILLION MARKET CAP
Yesterday the (ESU15) closed down 7.5 point, or -0.40%, to 2114.40 . The Dow futures (YMU15) closed down 137 points, or -1%, to 17866.00, and the NASDAQ futures (NQU15) closed down -0.20%, at 4666.50. In my view, the decline was overdue, and actually healthy for the index markets. Last week the S&P gained support from a handful of better-than-expected earnings with Google and Netflix leading the pack. Then Apple disappointed investors after the close as the company’s revenue guidance fell short of Wall Street’s expectations. It seems like one hand washing the other.
The recent rally has pushed the S&P within striking distance of its all-time high. The S&P 500 on Tuesday ended 0.5% shy of a record, while the Dow closed 2.1% below its record. At the end of the day, I still contend that nothing has changed. After a nearly month long sell off in the S&P futures, it took 8 trading days to not only wipe out the decline but put the futures back in striking distance of its all time contract high. In my view it’s the same picture being shown over and over.
In Asia, 7 out of 11 markets closed lower , and in Europe 9 out of 12 markets are trading lower this morning. Today’s economic calendar starts with the MBA Mortgage Applications, FHFA House Price Index, Existing Home Sales, EIA Petroleum Status Report (API), and earnings from BA, SNDK, KO, QCOM, ABT, AXP, TXN, WHR, EMC, LVS, DFS, APH, XLNX, PII, CRUS, TMO, STJ, ITW, OC, AN, TSCO, SIX, ARMH, ANGI, and VMI.
Our View: Sometimes you got it, sometimes you don’t. Yesterday I had it. I had an average sale of 2120.25, and I covered half at a 6-point profit and the balance late in the day at 2108.75. I felt this decline coming and when the sell programs started knocking out the downside sell stops I knew I had this one. I’m not saying this to boast. I am here to try and help you with direction, and show you what really can be done, and actually is being done. I am not here to say buy or sell at this or that level. It’s up to you to decide that, but when I get a gut feeling like I had yesterday, it’s hard to fight. What added to my confidence was the collective intelligence of the MrTopStep Trading Room (http://tradingchat.me). Our view is to sell the early rallies and buy weakness with tight stops. There could be more on the downside today.
As always, please use protective buy and sell stops when trading futures and options.
-
In Asia 7 of 11 markets closed lower : Shanghai Comp. +0.21%, Hang Seng -0.99%, Nikkei -1.19%
- In Europe 9 out of 12 markets are trading lower : DAX -0.62%, FTSE -1.20%, CAC -0.41%, MICEX -0.37%, GD.AT CLOSED at 6:00 am CT
- Fair Value: S&P -6.69 , NASDAQ -8.80 , Dow -78.41
- Total Volume: 1.2mil ESU and 2.6k SPU traded
- Economic calendar: MBA Mortgage Applications, FHFA House Price Index, Existing Home Sales, EIA Petroleum Status Report (API).
.
No responses yet