Collective Intelligence!
Today started with 209k ESU and 1.1k SPU traded on Globex, trading range was 1655.00 – 1648.50. Friday’s regular trading hours range was 1650.00 – 1661.00 before settling at 1651.10, down 4.6 handles. To start the day, the bulls were looking to prevent the first 4-day losing streak of the year. Roger_Volz EUR bid across the board after Bundesbank said that a rate hike is possible if inflation pressures emerge.
There’s not many observations as the poll’s only been around since February 2012, but bearish sentiment spikes in Bespoke’s weekly survey over whether the S&P 500 will be higher or lower a month from now, with 66% saying lower. The Fed and bond yields, hitting a 2yr high, remain focal points as traders and investors are preoccupied with the last days of summer and the looming start of the coming school year. Mainstream media chatter is that a Larry Summers-led Fed might be more likely to raise rates faster than the other front-runner, Janet Yellen.
Today’s pit hours opened unchanged at 1651.40 – 1650.70 and traded an early low of 1649.30 at 8:33 before marking a high of 1656.50 at 9:01. The SPU stretched to a 7-handle trading range followed by a series of lower highs and lower lows holding 1651 area, previous settle & today’s opening range in light volume. Big call from RBC [AAPL] could potentially double its current buyback of $60 billion. The broader market followed AAPL and [GOOG] showing early strength, up 2%, dragging the Nasdaq along, up .5% to lead the major indices, while [JPM] was down over 1.75% with the FTSE/Italian banks down -4.36%. Adding to the negative sentiment, 18 U.S. banks fell short in Fed stress tests, weighing on the [BKX], and SCHAEUBLE SAYS PROBLEMS OF THE CRISIS ARE NOT YET RESOLVED. However, the equities were still holding on to some of the early gains, trading sideways in the 1653 area through the midmorning with the DJIA down fractionally.
By 12:00 the spoos were sitting on top of the recent low of 1651 as the 10yr yield continued to climb, printing a 2.879% high today that also weighed on the equities. That is its highest level since 7-22-2011. Traders and investors fear higher interest rates could slow stocks and may stall the current slow-growth economy as all eyes are on the September FOMC meeting and the Fed’s “tapering is not tightening” mantra and the ensuing price action in the markets.
The afternoon session saw a series of lower lows with the small bounces holding underneath the opening range. 1645.50 traded by 2:15, but many traders did not see the new lows print because they had left early. The closing imbalance showed a modest $250M net to buy before settling at 1644.90, down 6 handles on the day for the first 4-day losing streak of the year.
