Big Rally Erases Some Recent Losses

Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.60%, Hang Seng +0.07%, Nikkei +1.29%
• In Europe 9 out of 13 markets are trading lower: CAC -0.09%, DAX -0.44%, FTSE +0.32%
• Fair Value: S&P +2.37, NASDAQ +15.53, Dow -13.21
• Total Volume: 1.77mil ESZ & 946 SPZ traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes MBA Mortgage Applications 7:00 AM ET, Housing Starts 8:30 AM ET, EIA Petroleum Status Report 10:30 AM ET, Lael Brainard Speaks 12:10 PM ET, and the FOMC Minutes 2:00 PM ET.

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S&P 500 Futures: Turn-Around Tuesdays Big Upside RIP, ES +2.46%, NQ +3.73%, YM +2.25%

The S&P 500 futures (ESZ18:CME) traded down to 2745.00 on Glovex Monday night. It could not have looked worse after the Saudi headlines and the $1.5 billion for sale MOC on Mondays close. But the real truth of the matter was that despite the selloff it was an ‘inside day’, and with so many people off base, and this week being the October options expiration, the buyers showed up in force yesterday.

The Frist print on Tuesday mornings 8:30 futures open came in at 2771.25, 26.25 handles off the Globex low. After that the ES went through a series of small dips and bigger rip. After printing up to 2783.50 at 9:00, the ES pulled back down to 2774.50, and then in came the buy programs. At 11:45 the futures traded all the way up to 2797.50, up 50.50 handles, or up +1.85%. A shocking turn around for the markets.

After a few handle pullback, the ES did a big stop run up to 2804.00 at 12:45, up 57 handles or up 2.10%. There was another small pullback, then the ES traded up to 2808.50. Once a new high was made the NQ started to back off just before 2:00 CT, pulling the ES down to 2800.50, and then the NQ came roaring back up pushing the ES back up to 2807.50 at 2:15 as the MIM started to show $176 million to buy. From there, the ES rallied into the close, up to 2816.25, as the MOC came out at $425 million to buy, and printed 2811.00 on the 3:00 cash close before settling the day at 2818.50, up +69.50, or +2.53%.

In the end, yesterday’s rally eased some of last weeks losses, but there is still a lot more to go. In terms of the days overall tone, it was one of the largest buy program day, I have seen in many years. In terms of the days overall trade, 1.77 million contracts traded, which would be considered big even on a big down day. Clearly the markets were very oversold and ran all the buy stops I have been talking about over the last few days.

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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. Any decision 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.}