One would never think the movie Casablanca and the S&P have something in common, but they do. It’s a song called “Play it again Sam.” The title to the song seems to say it all when it comes to the overall price action of the S&P 500 futures.
I think the connection between, and the difference from, MrTopStep and many of the well known periodicals and market timers is, I get to say it like it is. The S&P is not going to go down sharply and it’s not going to go up sharply. Monday the ESM15 sold off because of the German bund, and yesterday the S&P pushed back from the bund news, and after an early sell off rallied, and rallied hard. Look we could do all the ups and down, but at the lows of the day I came out in the MrTopStep trading room, and then onto Twitter, that I thought the ESM15 was at or near its low of the day. Why did I think we were making the lows when it looked so bad? The answer is simple; when the algos make the S&P look its worst, it’s time to buy. It was a gut feeling and from the low to the high the S&P rallied 20 handles. As I have always said, the S&P has to go down before it goes back up.
I know I repeat myself a lot but right now the S&P is doing a lot of repeating, trading at the same prices day after day. I keep thinking all these sharp declines could lead to an even larger selloff but it never happens and I want to keep in mind the “overall” price action remains unchanged: sell off and let the shorts push the S&P back up into the buy stops. I am sure there are more defined explanations of how and why the S&P went down and went up so much but the truth is after the selling dried up the futures rallied and not only did the ESM rally it totally pushed back from the weakness in the DAX, which was down sharply. Money is not only sloshing around in the bathtub but it’s also sloshing around between the US and Europe.
I am going to continue to press the idea that investors are undervested in the stock market, that despite what the S&P looks like when it’s selling off it’s actually “back and filling”, and finally that the risk is to the upside, and that all the spikes down have done is add more buy stops above the market, and that at some point this week the algos will run the upside buy stops. It’s important to follow your charts but I still think following premium levels between the S&P futures and the S&P cash and following volumes can be one of your best guides to trading the S&P futures. And not being afraid to go with those instincts.
In Asia 9 out of 11 markets closed higher, and in Europe 10 out of 12 markets quoted are trading higher this morning. Today’s economic and earnings scheduled starts with the MBA Mortgage Applications, Retail Sales, Import Export Prices, Atlanta Fed Business Expectations, EIA Petroleum Status Report, a 10 Yr-Note auction, and earnings before the bell from IMOS DSX RDY FOMX M PCP RL SHLX ELOS TSEM ZAYO ZBRA, and after the close from – APMH CLDN CSCO DGLY DANG GIGM IDSY JACK LXFT NTES SHAK VIPS EYES WX.
S&P 500 CHOP-SHOP
Our View: Whos the top dog? Remember, 12 out of 12 European markets were down across the board and the DAX was down sharply? Well, it was the ES that ripped higher and over night the ESM15 traded all the way up to 2105.75. You see the S&P never does what everyone wants it too. The ES has to “scare” everyone into thinking something greater is going to happen then just reverse course. Our view is for higher prices. That doesn’t mean the ES can’t pull back I just think it goes higher. Buy stops above 2110.00, but the larger ones come in above 2116.70 all the way up to 2126.00. The S&P cah study shows today being up 16 / down 15 of the last 31 occasions.
S&P cash study for the May expiration
Bad News Doesn’t Stay Long in the S&P500 Futures
- In Asia 9 of 11 markets quoted closed higher : Shanghai Comp. -0.58% , Hang Seng -0.58%, Nikkei +0.71%
- In Europe 10 out of 12 markets are trading higher: DAX +0.76%, FTSE +0.44%, MICEX -0.47% , GD.AT +1.19% at 7.00 CT
- Fair Value : S&P -4.41 , Nasdaq -4.53 , DOW -46.55
- Total Volume: 1.47mil ESM and 6.2 k SPM traded
- Economic Schedule:MBA Mortgage Applications, Retail Sales, Import Export Prices, Atlanta Fed Business Expectations, EIA Petroleum Status Report a 10 Yr-Note auction.
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