The S&P has had its shares of ups and down this year but it hasn’t gone anywhere. After 4 ¼ months of trade the only thing we know is the S&P may not be performing like it did in 2013, but it’s not going down either.
Algos running the wheel
Yesterday was a prime example of the markets doing whatever can hurt traders the most. If you’re wondering what I mean by that, let’s look at the first half hour of the S&P’s trade yesterday.
What we have learned about the S&P is that it’s almost impossible to sell a lower open, but yesterday that rule was violated right on the open with a big index arbitrage sell program. But it wasn’t the sell program that was the stunner; it was how the S&P (CME:SPM14) firmed up right before the 9:00 CT releases of the ISM number, almost like someone knew the number was going to be good.[youtube id=”gnin-BaP85Q” align=”right” mode=”lazyload” autoplay=”no” maxwidth=”300″]
No one said keeping up with the markets was going to be easy, but remaining patient and picking your levels better will make the job a lot easier. Learning your risk before you get into the trade, rather than after, is also a good way to maintain your position.
The Asian markets closed mixed and in Europe 8 out of 10 markets are trading lower this morning. Today’s economic schedule starts with the Gallup US ECI number, International trade, Redbook, 2-year note auction and Jeremy Stine speaks. Earnings reports are due from Walt Disney (NYSE: DIS), DirecTV (NASDAQ: DTV), Emerson Electric (NYSE: EMR) and Whole Foods Market (NASDAQ: WFM).
The S&P will never do what everyone wants it to do. It’s been turned into a game of tomfoolery by all the algos and program trading. Yesterday was another prime example of how the algos push the S&P down to run sell stops and then reverse to the upside to get the buy stops.
Our view remains unchanged: We still see a push above 1888 leading to a quick pop to 1893 and above 1893 will be a quick push to 1910. We lean to buying the dips; sure, you can sell a few rallies, but in the bigger picture we think the S&P is still going up.
As always, please keep an eye on the 10-handle rule and please use stops when trading futures and options.
In Asia, 6 of 12 markets closed higher: Shanghai Comp. +0.03%, Hang Seng -1.28%, Nikkei -0.19%.
In Europe, 8 of 10 markets are trading lower: DAX -0.34%, FTSE -0.26%
Morning headline: “S&P Futures Seen Higher Ahead of International Trade Numbers”
Economic calendar: Gallup US ECI number, International trade, Redbook, 2-year note auction and Jeremy Stine speaks. Earnings from Walt Disney (NYSE: DIS), DirecTV (NASDAQ: DTV), Emerson Electric (NYSE: EMR), Whole Foods Market (NASDAQ: WFM).