Fed Signals Two More Rate Hikes In 2018

Commentary, News, Technical Analysis

Index Futures Net Changes and Settlements:

Contract Settlement Net Change +/-%
S&P 500 (ESU18:CME) 2779.00 -9.25 -0.33%
DowJones (YMU18:CBT) 25,208 -107 -0.42%
Nasdaq 100 (NQU18:CME) 7231.00 +4.75 +0.06%
Russell 2000 (RTYU:CME) 1680.70 -5.70 -0.33%

Foreign Markets, Fair Value and Volume:

  • In Asia 10 out of 11 markets closed lower: Shanghai Comp -0.17%, Hang Seng -0.93%, Nikkei -0.99%
  • In Europe 13 out of 13 markets are trading lower: CAC -0.17%, DAX -0.31%, FTSE -0.28%
  • Fair Value: S&P +4.28, NASDAQ +28.31, Dow +13.52
  • Total Volume: 1.38mil ESU & 2,367 SPU traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes Weekly Bill Settlement, Jobless Claims 8:30 AM ET, Retail Sales 8:30 AM ET, Import and Export Prices 8:30 AM ET, Bloomberg Consumer Comfort Index 9:45 AM ET, Business Inventories 10:00 AM ET, EIA Natural Gas Report 10:30 AM ET, Fed Balance Sheet and Money Supply 4:30 PM ET.

S&P 500 Futures: #ES Fed Day Dumpster

Wednesday’s trade started with the Asian markets down and the European markets up midday. The overnight Globex range in the S&P 500 futures (ESM18:CME) was 2789.25 to 2796.00, with 245,000 contracts traded.

The first print off the 8:30 open was 2792.00. After the open the ES did a little back and fill, staying in a four handle range for the first hour. After retesting the Globex high at 2796.00, the ES sold off 10 handles down to the 2686.00 level, did a little more back and fill, traded up to the vwap at 2792.50, and then flunked lower as the fed headline hit the tape. From there, the ES sold off down to 2784.50, bounced a little, and then made a low at 2781.25 around 1:35.

After the low the ES ran up to 2789.25, had one last pullback down to 2784.25, and then shot up to 2793.50 at 2:09 CT. The next move was back down to 2784.50 at 2:45 while the MiM was showing buy $380 million to buy. The ES sold off down 2783.00 as the MiM flipped to sell $30 million. At 2:50 the ES sold off down to 2781.75, and then down to 2779.50.00 as the MiM went to over $800 million to sell. On the 3:00 cash close the ES traded 2780.25 before settling the day at the low tick of 2778.50, down -9.75 handles, or -0.35% on the session.

In the end, the ES rallied, and the ES fell. Did it have much to do with the fed’s rate hike? I guess the answer is that it did, but the ES and NQ have been going up for several weeks and were overbought. Does this mean the high is in for now? I do not think so, but I think a pullback is probably a good thing. In terms of the ES’s overall tone, obviously it didn’t act that great after the fed, but the selloff was not that dramatic. In terms of the ES’s overall trade, it was the best volume day of the week.


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.

Follow MrTopStep in our Social Space:

Danny Riley (3062 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.

Leave a Reply