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S&P 500 Futures Recap – Trade Date March 22, 2021


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Chart of the Day

GMTT / Chart of the Day / Wheat / March 23, 2021

Wheat (MAY)

The forecast for Wheat earlier this month was that its trading near a projected higher and expected to see a correction.
As you can see on today’s chart the up move in Wheat failed just around the 200 MVA.
One of the so many tools technical analysts use to determine a high and possible reversal.
Maybe it is a myth or a coincidence but it’s something that technical treaders do look at.
The media says that the Wheat prices corrected due to the strong US crops outlook and easing demand.
Our technical models indicated the correction in late February and GMTT called the high for Wheat around 683.
The next short term downside target is 617.
A close below indicates a more serious correction towards 546.
We suggest for traders that are short Wheat to keep the buy stop at 640.

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Our View

Biden’s $3 Trillion Economic Plan and the S&P 500

Yesterday the Biden administration crafted a ‘multipart’ economic and infrastructure plan that could cost upwards of $3 trillion. The ‘Build Back Better’ plan calls for an infrastructure that would fix bridges and roads. The plan also included many of Mr. Biden’s climate change initiatives. The plan would also focus on education and a newly expanded child tax credit plan set to expire at the end of 2021 and would provide for universal pre-kindergarten and free tuition to community colleges. The problem? The bill will have to pass through a divided congress and Republican objections and Democrats that are not in agreement with the size of the bill. Speaking from the floor of the Senate, Minority leader Mitch McConnell said “We’re hearing the next few months might bring a so-called ‘infrastructure’ proposal that may actually be a Trojan horse for massive tax hikes and other job-killing left-wing policies,”  President Biden will discuss this agenda during his first formal news conference on Thursday. 

The stock market reacted favorably to the news but stock market volume was low. The VIX fell and the S&P futures (ESM21:CME) and the Nasdaq 100 futures (NQM21:CME) moved sharply higher with only minor pullbacks. The rotation was selling the Russell 2000 (RTYM21:CME), -0.86%, and buying the NQ, +1.83%. Total volume in the ES was low at 1.28 million contracts. With so much money about to flood the system, my gut feeling is that the S&P will accelerate to the upside over the next 90 days.

Our view, tech stocks led the way higher yesterday with some help from a firmer 10-year note. If that continues it maybe hard to be a seller. Traders will keep a keen eye on what the Federal Reserve will say about rising bond yields despite saying that it isn’t concerned. There is going to be a ton of fed speak over the next few days. While I think higher prices I also expect a lot of fed headlines. Our lean is to sell the early rallies and buy the pullbacks. If the ES can take out the June 3947.75 contract high it could be a quick trip to 3975-3980. 


Danny Riley is a 39-year veteran of the CME  trading floor. He ran one of the largest S&P desks on the floor of the CME Group since 1985.

As always, please use protective buy and sell stops when trading futures and options.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS




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