The moral of yesterday’s trade was plain to see. The algorithmic programs that push the S&P down are the same algorithmic programs that make the S&P go back up. During Friday’s abbreviated session only 95,000 ESM15s traded, and during Sunday night’s Globex session into Monday’s 8:30 open only 80,000 ESM15 traded. The lower-than-expected jobs report was bad for the S&P on Friday but good for it on Monday as it pushed the idea that the Fed will raise rates anytime soon even further out. Most investor surveys now put the consensus at November of this year.
I’m going to keep this short and sweet: After the ESM15 opened down 11.25 handles on Monday’s 8:30 open, the futures came to life on the upside. While I admit to trying to sell the ES at the 2070 level, it didn’t take long for me to catch on that the buy program was much bigger than I thought it would be. As the S&P futures went up, my friend the PitBull was showing me why I should not be fighting it. Sometimes it’s nice to have smart friends in high places. The messages were clear to see—I just wasn’t listening. I suggest you do a time and sales on the text messages below. Remember the messages are EDT.
09:39:15 PITBULL: qcha +11
09:43:57 TRADINGDATA2: (driley) there have been 25 separate buy imbalances
09:45:57 PITBULL: qcha +25 killed this am sold puts bot calls on opening
09:47:47 PITBULL: qcha told the story once again my best indicator
09:52:23 PITBULL: qcha +40
10:03:46 PITBULL: qcha +42
10:25:02 TRADINGDATA2: (driley) holy smokes algos taking out all the stops
10:26:03 PITBULL: qcha wins again +54
02:19:34 PITBULL: is there much left in this?
02:34:29 PITBULL: +86
At MrTopStep.com we believe that as traders it is our right to share, and that is exactly what the PitBull was doing yesterday. As the S&P 500 futures (ESM15:CME) moved higher he continued to show the MrTopStep trading room what one of the best independent traders in the world was looking at: the QCHA.
It’s not easy being a trader, but I believe in my heart that if you stick with it, do the work and use proper risk management that it is possible to win at this game. The instant messages above called the S&P from 11+ handles lower to over 20 handles higher. To join the MrTopStep collective, go to www.mrtopstep.com and tap on the IMPro tab. Hope to see you soon.
In Asia 9 out of 10 markets quoted closed higher and in Europe 11 out of 12 markets are trading higher. Today’s eco calendar starts with the Gallup US ECI, William Dudley and Narayana Kocherlakota speaking from the Fed, Redbook, JOLTS, 3-year note auction, consumer credit and Alcoa kicks off the earnings season Wednesday morning.
TURN-AROUND TUESDAY; Down 8 of the last 13
Our view: At the end of the day I still think the S&P is going nowhere fast. The S&P is now 3 months into the year and is up a modest 1.1%. I do not think the markets are going up or down sharply anytime soon.Get people long into the rally and sell off, get people short into the decline and rally. That’s how this is working right now. Our view is we lean to selling the early rallies and buying weakness while keeping in mind that Tuesdays have not been all that good to the S&P.
“Algos Make the S&P Go Down; Algos Make the S&P Go Up”
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 10 out of 10 markets quoted are trading higher: Shanghai Comp. +2.52%, Hang Seng CLOSED, Nikkei +1.25%
- In Europe 10 of 11 markets are trading higher: DAX +1.24%, FTSE +1.55%, MICEX -0.24%, Athens GD.AT +0.38% (at 7:00 am CT)
- Fair value: S&P -7.60, Nasdaq -8.07 , Dow -87.07
- Total volume: LOW 938k ESM and 7.3k SPM traded
- Economic schedule: Gallup US ECI, William Dudley and Narayana Kocherlakota speak from the Fed, Redbook, JOLTS, 3-year note auction, consumer credit and Alcoa kicks off the earnings season Wednesday morning.
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