The S&P 500 seems to be in a good mood at last. Thursday’s jobless claims report was released as it was considered essential. The Fed’s Jerome Powell and Eric Rosengren are scheduled to speak.It’s been a long week of ups and down and a big-time S&P shake & bake. Do you think it’s over yet?
The Asian markets closed sharply higher and 11 out of 12 markets in Europe are trading higher. With the ongoing government shutdown, including nearly all statistical agencies, today’s calendar will not have figures for producer prices, retail sales and business inventories as originally scheduled.
Let’s say it like it is: We live in an ever-changing environment. Things we used to use to read the markets don’t work and the new tools only last as long as it takes to learn them. It’s Friday, so let’s keep it short and sweet.
On Monday the December E-mini S&P 500 futures (ESZ13) closed down -17.1 handles, on Tuesday down -17.3 handles and down -1.6 handles on Wednesday for a total of minus 36 handles. Yesterday the S&P futures closed up a shocking +36.2 handles. Yesterday wiped out three days of declines.
From Wednesday’s low at 10:24 CT at 1640.00 to yesterday’s high of 1687.75, the ESZ rallied 47.75 handles in less than 29 hours. As I explained on yesterday’s Closing Print Video, MrTopStep has a trading rule that says, “It takes days and weeks to knock the S&P down and only one to bring it back.”
And that, my friends, is exactly how this has gone. Is the S&P out of the woods yet? We think so, but with volatility up so much over the last few days, that risk is not going to just disappear.
I wrote the whole e-mail for today from the floor yesterday. It’s my belief that over the last few days the government has showed you its hand. After all the fighting, neither party wants to be blamed for a default and the Republicans’ approval rating has dipped under 30%.
The sad thing is what’s happened to the markets and all the losses it took to get to this point. I wrote from the floor Thursday: “It’s 2:20 and the ESZ just made a new high at 1687.00, that’s up 47 handles since 10:23 am Wednesday.” Our view is threefold :
- If the government comes to a deal the S&P is going to blast through last week’s 1692.25 high. When it does that it will fall into a big line of buy stops that run all the way up to 1706-1708.
- If the government puts it off, which I do not think they want to do, it’s possible we see a sideways to lower price action after yesterday’s big up day.
- We will be looking for the Pit Bull’s low on the Thursday / Friday (today) the week before the October expiration.
Ned Davis S&P cash study for the October expiration: http://mrtopstep.com/2013/10/expiration-study-october-2013/
And lastly, I know I am not right all the time. I try my best, but sometimes that isn’t good enough. I am not here to tell you to buy or sell. Most of you that have been reading me for a while know that I provide a “feel” for the market.
For some of you that’s just a word. For others it may take a little longer but if I do my job I should become your eyes and ears on the floor. I really hope you enjoy reading my stuff …
As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.
- In Asia, 11 of 11 markets closed sharply higher: Shanghai Comp. +1.70%, Hang Seng +1.16 %, Nikkei +1.48%.
- In Europe, 7 of 12 markets are trading higher: DAX +0.25%, FTSE +0.70%.
- Morning headline: U.S. debt deal hopes lift world shares, dollar fades
- Total volume: 2.28 mil ESZ and 12.6k SPZ traded
- Economic calendar: Consumer sentiment and the Fed’s Jerome Powell and Eric Rosengren. No Producer Price Index release today. Retail sales and business inventories data also delayed.
- MrTopStep Closing Print video