China Sell Off Leads To Big Rally

Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.15%, Hang Seng -2.19%, Nikkei +1.53%
• In Europe 12 out of 12 markets are trading higher: CAC +1.96%, DAX +2.23%, FTSE +1.49%
• Fair Value: S&P -0.85, NASDAQ +10.61, Dow -32.13
• Total Volume: 2.2mil ESM, and 1.1k SPM traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes the Weekly Bill Settlement, Challenger Job-Cut Report 7:30 AM ET, International Trade 8:30 AM ET, Jobless Claims 8:30 AM ET, Bloomberg Consumer Comfort Index 9:45 AM ET, EIA Natural Gas Report 10:30 AM ET, Raphael Bostic Speaks 1:00 PM ET, Fed Balance Sheet and Money Supply 4:30 PM ET.

S&P 500 Futures: #ES ‘Short Squeeze’ Not Tariffs, Its Negotiations

The S&P had a good day Tuesday, then had had a hard reversal Wednesday when China announced $50 billion in tariffs. The S&P 500 futures that closed at 2613.25 on Tuesday, traded down to 2559.25 on Globex, with oversized volume of 407,000 contracts. On Wednesday’s 8:30 CT open the ES traded 2578.25, and then traded up to 2595.00 at 9:13. From there, the futures sold off down to the vwap at 2583.25 before rallying up to a new high at 2599.75 in 5 minutes.

The ES then pulled back down to 2593.25, and rallied up to 2610.25, up +50.25 handles off the globex low, and up +38 handles from the opening print. After a pullback down to the 2600.00 area, the ES rallied up to a new high at 2619.50 at 11:45 am, a +60 handle bounce off the Globex low. The ES then sold off down to 2601.50 at 12:27, and over the next hour rallied all the way up to 2629.00, +69.75 handles off the Globex low, and +56.50 handles off its opening print.

After a small pullback down to 2622.00, the futures continued to rally up to another new high at 2633.25. There was another slight pullback, followed by a rally up to 2638.50 just after 2:00. When the MiM jumped to $800 million to buy, the futures traded up to 2646.00. On the 2:45 cash imbalance reveal the ES traded up to 2650.00. On the 3:00 cash close the futures traded 2644.25, and went on to settle at 2647.25 on the 3:15 futures close, up +34.50 handles, or +1.32%, on the day.

It was another volatile session, with the Dow Jones swinging in a 741-point range. The S&P 500 logged a move of at least 1% for the eighth time in the past nine sessions, posting consecutive gains for the first time in nearly a month. In the end, China tariff news used up all the selling before yesterday morning’s 8:30 open. The dip buyers and bargain hunters showed up because traders think the U.S. and China will ultimately reach a compromise. With everyone short and so many buy stops above, it created a giant all day buy program. The other astounding thing is how much the ES moved from low to high. In terms of the days overall trade, there was big volume. In terms of the days overall tone, it was extremely bullish.

SIGN UP HERE TO GET THE FULL MRTOPSTEP OPENING PRINT!

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.}