Today started with 280k ESU traded on Globex, e-mini trading range was 1653.75 – 1662.00. Thursday’s regular trading hours (RTH’s), SPU pit session trading range was 1655.50 – 1669.00 before settling at 1655.70, down 26.3 handles.
Roger_Volz posted: multiple traders and media accounts cited an unintended “fat finger” execution of a 7 billion yuan ($1.13 billion) order at a local brokerage as the cause for the sudden spike in Shanghai stocks. The Shanghai Stock Exchange Friday afternoon confirmed that the investment strategy department at Everbright Securities Co. had encountered a problem in its arbitrage system, according to a Xinhua news report.
In the U.S. [JWN] continued the retailing woes and lowering guidance following the midweek disappointments in the retail earnings reports raising “some questions regarding the health of the American consumer in a sluggish economy.” As we know, the Fed has been paying close attention to the economic data — jobs and signs of inflation as well as the consumer and confidence/spending habits. Consumer spending makes up roughly 70 percent of economic activity and they are also watching the housing industry along with its related subsectors, including interest rates. 30-yr mortgage rates are up just over a full point in recent weeks and today’s housing data showed July building permits 943k vs exp of 945k, prior revised from 911k to 918k with both productivity and unit labor costs inching higher. Productivity in U.S. rose 0.9%, labor costs climbed 1.4%. Prior revised from 0.5% to -1.7%, nothing to taper about here…
St. Louis Fed Governor James Bullard said overnight that the Fed could begin tapering with small moves rather than larger and aggressive cuts to monthly purchases. This was the first time a Fed member had discussed tactics the Fed may employ. Bullard said he hasn’t decided whether the Fed should begin pulling back in September yet.
Today’s pit hours opened fractionally lower to 1655.50 – 1655.30, traded an early low of 1653.80, retesting and holding the Globex low before trading sideways to higher in a grinding and choppy fashion following a 2% drop in the equities this week on fears of the Fed beginning to taper a month from now. william_blount (08:52) last hr high was 1661 and the daily pivot is 1660.1.
At 8:55 the 1658 area was trading when the University of Michigan consumer confidence disappointed, checking in at 80.0 vs exp of 85.5, dropping from its 6yr high and its biggest miss since April 2012, sparking chatter – will/can the Fed taper with consumer confidence dropping like this?
Following the consumer confidence miss, the SPU retested/held the opening range at 9:00 before testing the 1560 area and flopping back to the opening range at 9:25 and bouncing to a new intraday high of 1661.00 at 10:04. william_blount (09:24) BULLS NEED to get thru the pivot and last hr low — BEARS need to reel off some more SPOTS 1651.5, 1647. The [XHB] was up nearly 1.25% and the banks/financials were stepping higher through the morning as well, lending support as the VIX dropped under 13.70, down a full point from yesterday’s close before bouncing back.
Going into the lunch hour(s) the equities lost their bid in light volume and by 11:45 the bears converted the opening range followed by a series of new intraday lows, printing a new intraday low of 1650.00 at 1:17 before trading sideways to higher. Chatter of the August option expiration showed the open interest (OI) in 1650 strike as of yesterday’s close was 18k puts with a total of 29k traded so far today. In the 1650 calls: closed yesterday with 4k OI and 2k traded today. The out of the money Aug 1600p had the most OI at 27k; next was the 1650p listed previously. By 1:45 the spoos caught a bid and converted the opening range by 2:33 and were trading 1656.50 area when the closing imbalance showed a modest $300M net to buy going into the expiry. The cash close traded 1653.20 area before settling at 1651.10, down 4.6 handles on the day.
Sam_E yes i have a note on my screen that says in big bold letters. THE PIT IS REAL. EVERYTHING ELSE IS BS. there is a real difference between pit highs and lowes and the ones on your chart. know the difference. the pit rules the roost. the pit plays in the real world. globex is the dream world.
Carley_Garner (08:25) We continue to be bullish nat gas. Our analysis was featured on Mad Money with Jim Cramer last night: http://www.cnbc.com/id/100966449 On the other hand, we are bearish crude oil. Nat gas and crude trade opposite each other about half the time, so it isn’t out of the ordinary for one to go up and the other down.
The U.S. government comes back from vacation on Sept. 9 for both House and Senate. That is 9 legislative days before the end of the fiscal year and before the current spending authority expires. Without action (including a month-long emergency extension) shutdown on Oct. 1.
Jack’s interview on MrTS site … excellent! http://mrtopstep.com/2013/08/the-next-big-trade-will-be-in-bonds-in-fall-2013/