The Asian markets closed lower and Europe has gone along for the ride. Yesterday was another example of an early uptick and then more sell programs. We are not sure if this is another case of the S&P being weak in the first part of the week and rallying late in the week or just more selling tied to the “taper” question. Either way, the overall tone of the S&P was not good and neither was the way the S&P closed. It makes it even harder to figure out when the volumes are so low.
Currently the SPU is 32 handles off its contract high, and while we are still bullish, it’s starting to feel like the sellers are taking advantage of the low liquidity. As we have always said, when we are wrong we admit it, and with the exception of a few 2- to 4-handle bounces it was all downside yesterday. I told the trading room it was not a good close and to expect lower prices overnight, and that’s what we are looking at this morning.
Let’s keep it simple today: If you are shopping for some downside protection, we were looking at the EVU (Sept end of the month) 1600 put, which was trading 240@250 yesterday. I am sure if you look lower there are some good outright puts to buy or put spreads you can put on for a larger push down. As for the day trades, we can’t sell the S&P down 7 or 8 handles.
Our view: There are a ton of numbers out this morning and more Fed speak out of James Bullard. Because we have been off a bit and because there is so much data to go through this morning, I want to get to the floor and get a look at the price action before jumping in. With the markets setting up for the fall push, it may be time to try out the MrTopStep IM Pro trial and check some of the flow: http://chat.mrtopstep.com/free/
As always, keep an eye on the 10-handle rule and please use stops when trading futures.
Lastly, please find an hour to look at the PitBull speaking at Amherst College. He has been my friend for a long time but I still love hearing him talk. “A Market Wizard Speaks: Marty Schwartz speaks at Amherst College, Spring 2013.” At Marty’s request, we are offering the full video free of charge to you and the world. Few people trade as well as Marty does. Even fewer are willing to share what they’ve learned.
Your morning numbers:
- In Asia, 8 out of 11 markets closed lower, Shanghai Comp.-0.87% , Hang Seng _0.01% , Nikkei _2.12%).
- In Europe 10 out of 12 markets are trading lower (DAX -0.65%, FTSE -0.93%).
- Morning headline: US Dollar Rallies to Session Highs on CPI, Jobs Data
- Total volume: 1.5mil ESU and 5.5k SPU traded
- Economic calendar: : James Bullard Speaks, Consumer Price index, Jobless Claims, Empire State Mfg index, Empire State Mfg. survey, Industrial production, Housing market index, Philadelphia fed survey, E-commerce retail sales, and the nat gas numbers
- Ned Davis Expiration Study for August 2013: http://mrtopstep.com/2013/08/expiration-study-for-august-2013/