- US Crude Futures (CL ) Trade up to $50.00
- Dollar Drops To a Six-Week Low
- Gold Rallies After Fed Minutes
- Fed Hesitant to Raise Rates Cites Low Inflation
- Bond Yields Hit October Highs
- China Stocks Join Global Rally
- Dow Jones Back to 1700
ESZ15 Up 7 of the last 8
Hold on a minute traders, the stock market is going back up. As the stock market moves into the 2015 3Q earnings season, crude oil futures (CLX5 ) have moved back above $50.00’s, and the S&P futures (ESZ15:CME) traded up to 2008 after the September Federal Reserve minutes were released.
It’s not just the higher prices that have changed. Two weeks ago it was a sell every rally mentality, and last Tuesday September 30th, when the S&P futures came crashing down to 1861, the S&P was looking like it was ready to retest the August 24th 1831, low but instead the markets rallied. Then in comes Friday’s weaker than expected jobs number, the ESZ15 sells off 40+ handles, then ends up rallying 65 handles, and since then the index has gone nearly straight up. Clearly the markets are taking the bad news and making good of it. After selling off a little early yesterday, the same ‘back and fill’ patterns started showing up again, sell off a few handles (points) and then the bids would come flying back in. It was another trading day of ‘buy programs and buy stops’.
The US stock market has rallied sharply over the last week and a half, and there was no let up yesterday, as the ESZ15:CME started to take out buy stops above 1991. It’s been a non-stop buy fest, and next week’s October expiration stats show there could be more upside coming.
- The Dow has risen 8.8% from its Aug 24th low and is still down 4.3% this year.
- The S&P has risen 9.5% from its Aug 24th low and is still down 2.5% this year.
- The Nasdaq has risen 11% from its Aug 24th low and is positive 2.5% this year.
We are not doing to do a big Opening Print today. We are all seeing the same thing. The S&P ‘corrected’ to the downside and is now grinding higher again. While the back and fill price action has been helping push the S&P back up, it’s now rallied 149 handles from its 1861 low, and 179 handles off it’s 1831 low. There is no doubt the markets are going up, but for how long? October may be known as the bear killer, but that doesn’t mean there won’t be some type of ES slip and slide.
In Asia, 10 out of 11 markets closed higher (Shanghai Composite +1.27%), and in Europe 10 out of 12 markets are trading higher this morning. Today’s economic calendar starts with Import Export Prices, Atlanta Federal Reserve Bank President Dennis Lockhart speech in New York, Wholesale Trade, and Chicago Federal Reserve Bank President Charles Evans speech on monetary policy, in Milwaukee.
ALCOA Kicks off Earnings Season: -3.8%
Our View: According to Factset, profits among companies in the S&P 500 are expected to decline 5.4% in the third quarter. Wall Street analysts are talking down the S&P earnings season again, and it could not come at a ‘spookier’ time. The ES has gone straight up. Our view is unchanded; According to the S&P cash study, the Friday before the October experation has been up 20 / down 11 of the last 31, and Monday has been up 23 / down 8 of the last 31 (see study). If the stats are correct and we see a pull back later in the week it could be a perfect setup to try a going long into the next week. Our view for today is the same as yesterday; sell the early rallies and buy weakness keeping in mind how much the S&P has rallied.
As always; please use protective buy and sell stops when trading futures and options.
- In Asia 10 out of 11 markets closed higher : Shanghai Comp. +1.27%, Hang Seng +0.46%, Nikkei +1.64%
- In Europe 10 out of 12 markets are trading higher : CAC +1.16%, DAX +1.23%, FTSE +0.86% at 6:00 am CT
- Fair Value: S&P -8.29 , NASDAQ -11.36 , Dow -98.59.
- Total Volume: 1.8mil ESZ and 7.2k SPZ
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