Like it or not the S&P futures (ESM16:CME) did ‘exactly’ what we thought it would do. It’s called Counter Trend Friday, where everyone sells before and after the jobs number is released. As we have said and will continue to say… the S&P 500 futures never do what most people want them to do when they want it, and you know what? The algos are programmed to know exactly when that happens, and fully take advantage of it, it’s called being off base.
Last week the S&P 500 futures maintained lower prices into Friday’s non-farm payroll number, and when the number came in at a disappointing 160K, the futures traded even lower down to 2030.50. At that point it was clear that the majority of traders were short all week. When the remaining bears climbed onto the bus after the cash open there was one more head fake to the downside, just to get the late coming shorts into position, and by then everyone who was going to short into the end of the week had done it. When traders cannot or will not hold into the weekend, they set their upside buy stops, and the algos begin hunting. Friday was no exception as the futures ran higher to close at 2052.75, 20+ handles off the lows, and positive for the day.
Overall, a week that was solid to the sell side closed on a slightly positive note. However, it appears to be a short covering rally into the end of the week, once again leaving a jump ball between bulls and bears going into the Pitbull’s pre-expiration week.
Overnight, the S&P 500 futures maintained higher prices as global markets held a bid helping push the ESM16 up to 2059.50 earlier this morning, up 6.75 handles, and is currently sitting at 2058.25, up 5.5 handles. To the upside, the 2060 area of the globex high coincides with Thursday’s contract high as well as resistance area from late Tuesday and early Wednesday. Above 2060, there should be enough buy stops to push the futures up to the 2075 area near last week’s high. To the downside, a loss of the 2050 area and globex low of 2049 opens the door to lower prices leading to a potential retest of Friday’s 2030.50 low. With low volume this morning, under 175K, with two hours until the cash open, and the calendar very quiet, we tend to think “mutual fund Monday” will be at work, and see the bias leading to higher prices in today’s session.
In Asia, 6 out of 11 markets closed lower (Shanghai -2.79%), and In Europe, 11 out of 12 markets are trading higher this morning (DAX +1.82%). This week’s economic calendar features 19 economic releases, 11 Treasury events and 5 Fed speakers. Today’s economic calendar includes Charles Evans Speaks, Labor Market Conditions Index, 4-Week Bill Announcement, 3-Month Bill Auction, 6-Month Bill Auction, TD Ameritrade IMX, and Neel Kashkari Speaks.
Our View: Based on how the futures closed it’s our guess we see higher prices today. I know everyone thinks lower, but I think there is a little more upside, and later in the week we will be looking for the PitBull’s Thursday/ Friday low the week before the May expiration. Our view is to sell the early rallies and buy weakness.
The MrTopStep BootCamp is May 16-20. It’s a very impressive line up of traders that would be hard to find any place else. We have always considered our traders as part of a collective, sharing ideas, price levels and any pertinent news that may be moving the markets. This bootcamp is especially loaded with with top tier traders. If you have never joined the bootcamp I suggest you do. Not only will you see how they do it, you will be able to watch the live trading. There really is no other trading education service like this, and it’s unique to the retail trading business, but it’s not all retail. Many of the things we use and talk about are exactly the same stuff we worked with on the trading floor when we were talking to the big banks and hedge funds (too bad they didn’t listen). That said I have posted the weekly schedule for you to review and the link to the sign up.
MrTopStep LIVE Trading Bootcamp!
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 open markets closed lower: Shanghai Comp -2.79%, Hang Seng +0.23%, Nikkei +0.68%
- In Europe 11 out of 12 markets are trading higher: CAC +1.29%, DAX +1.82%, FTSE +0.48% at 6:30am CT
- Fair Value: S&P -5.38, NASDAQ -5.78, Dow -71.83
- Total Volume: 1.8mil ESM and 2.6k SPM traded
[s_static_display]
No responses yet