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Chart of the Day
Our View
Bank of America And JP Morgan Report First Quarter Earnings
You can’t make this stuff up. The S&P futures (ESM21:CME) have rallied 152 handles or 3.8% since the end of the quarter and have made 20 new contract highs since January 1. Year to date, the S&P 500 futures are up 9.9%.
The non-stop rally is happening while US vaccinations reach 3 million a day, more people entering the workforce and and the government is giving out $1.9 trillion in stimulus.
The PitBull Marty Schwartz said, “the markets making record highs on the lowest daily volumes on the year on negative breadth should be a concern.”
This week, Bank of America (BAC), JP Morgan (JPM) and Delta Airlines (DAL) kick off the earring season. Executives from Intel (INTC), Ford (F) and General Motors (GM) are meeting at the White House to discuss the chip shortage on Monday, the Coinbase IPO is Wednesday and Congress restarts negotiations on the passage of President Biden’s infrastructure package. All of that goes along with several key economic reports.
What’s it all mean? It could spell increased volatility. Last week there was a $40 million bet that the CBOE Volatility Index (VIX) — considered the “fear gauge” — will rally above the $25 level and trade up to $40 by mid-July.
Our view: the ES has gone a long way and hit the 4,120 level I have been looking for. The futures are over overdone and in need of a pullback. The PitBull’s rule is that the S&P rallies early in the day and early in the week. Our lean is to continue to buy the pullbacks.
As we all know, there’s no crystal ball when it comes to trading stocks, options or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk free for 30 days.
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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