China And US Start Trade Negotiations

Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 11 out of 11 markets closed higher: Shanghai Comp +1.04%, Hang Seng +0.79%, Nikkei +2.65%
• In Europe 12 out of 12 markets are trading higher: CAC +1.33%, DAX +1.69%, FTSE +1.89%
• Fair Value: S&P +0.96, NASDAQ +15.39, Dow -13.18
• Total Volume: 2.8mil ESM, and 1.2k SPM traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes Redbook 8:55 AM ET, S&P Corelogic Case-Shiller HPI 9:00 AM ET, Consumer Confidence 10:00 AM ET, Richmond Fed Manufacturing Index 10:00 AM ET, State Street Investor Confidence Index 10:00 AM ET, and Raphael Bostic Speaks 11:00 AM ET.

S&P 500 Futures: U.S. And China Hold ‘Friendly’ Trade Talks, #ES Up 2.5%, #YM Up 2.85%, #NQ Up 3.48%

When news broke that the U.S. and China were quietly negotiating widening market access to U.S. products, Japan’s Nikkei closed up 0.7%, Hong Kong’s Hang Seng Index closed up 0.8%, and the Shenzhen A Share Index advanced 1.4%.

After making a low at 2585.75 Friday afternoon the S&P 500 futures traded up to 2638.00, up +41.50 handles, on Globex Monday morning, with 345,000 futures traded. On yesterday’s 8:30 CT futures open, the ES traded 2627.50, and then traded up to 2640.00 at 8:44 am. After the early high was made, the ES reversed down to 2619.25. From there, the futures went on to make six higher lows before dropping all the way down to 2601.75, a 38.25 handle break.

Once the sell programs were finished, the ES started to climb, and by 11:35 had traded back to 2632.00. After that, the ES pulled back a little, and then traded 2634.00. There was another small pullback, then the ES shot up to 2654.00.

As the MiM opened up showing small for sale, the ES traded up to 2657.25 at 2:19. Then, as the MiM flipped from over $500 million to sell to $6 million to buy, the futures traded up to another new high at 2662.75. On the 3:00 cash close the ES traded 2659.50, sold off down to 2655.50, then went on to settle at 2660.50 on the 3:15 futures close, up +60 handles on the day or, up +2.46%.

In the end, tech stocks ruled the day. With the exception of the early pullback, every ‘little’ selloff was a set up for a higher high. With so many shorts in the markets, and the upside lined with buy stops, the very same headline news algos that helped knock the markets down so hard last week were helping the markets race higher. If you tried to fight it, you got completely run over!

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