Mr President, Please Shut Up

FREE WEBINAR – How I trade with just 6 setups

MrTopStep is sponsoring a free webinar next Saturday, April 14th, at 1pm ET with Major League Trading. The subject will be limiting risk in a high risk markets with Nadex binaries using 6 setups. MLT did a mini-webinar in our last open house which left us intrigued on the possibility of adding in some known risk trades into our bag of tricks. MLT has asked that we keep attendance limited, so there is room for only about a third of what we usually get can sign up.

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Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.26%, Hang Seng +1.29%, Nikkei +0.51%
• In Europe 9 out of 12 markets are trading higher: CAC +0.22%, DAX +0.54%, FTSE -0.11%
• Fair Value: S&P -0.44, NASDAQ -0.44, Dow -31.70
• Total Volume: 2.5mil ESM, and 1.1k SPM traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes TD Ameritrade IMX at 12:30 PM ET.

S&P 500 Futures: Trump Escalates Trade War With China Sends Stocks In A Tailspin

Not even Larry Kudlow knew about the additional $100 billion in Chinese tariffs. Despite the new hire, President Trump continues flying on his own, weakening the confidence of the markets.

When the news broke about the new tariffs Thursday night, the S&P 500 futures sold off down to 2619.50, down -42.25 handles, and then traded up to 2648.25 after the jobs number. The ES pulled back and traded 2639.00 on the 8:30 AM CT open, and at 9:53 had traded all the way up to 2656.75. After a pullback, and a lower highs at 2654.25 and 2653.25, the futures sold off all the way down to 2625.25 at 10:25 CT. From there, the ES rallied and double topped at 2537.75 before selling off down to 2622.00 at 11:30.

Ater a bounce up to 2639.50, the futures went into a downward spiral. At 2:05 CT the ES traded 2584.25, down -77.50 handles on the day. The next move was back up to 2600.25, as the MiM went from $900 million to sell to $754 million to sell. The ES then sold back off to 2591.50 and jumped up to 2606.50 as the MiM paired back to sell $485 million. At 2:45, when the MiM went to $396 million to sell, the ES went from 2599.00 to 2612.00 in two minutes, traded 2602.75 on the 3:00 cash close, and went on to settle at 2604.50, down -57.25 handles, or -2.15% on the day.

In the end, I am having a very hard time seeing a silver lining. I think my old saying that, ‘I am a bull, just no fool’ applies. No matter if it’s a 50 handle rally or a 100 handle rally, they just don’t hold. Friday’s lower jobs number was a very minor part of the overall weakness. The trade wars are undermining the economic improvements and adding uncertainty. Sure, Facebook has caused an avalanche of selling, but I get the feeling if it was not the trade wars, there would be something else.

I was out to lunch with a trader yesterday, and she was playing down the big drops by saying to ‘look back into the 80s, 2% was much larger.’ I laughed, and reminded her that the S&P rallied over 330% since the March 2009 low. I had to laugh. In the early 1980’s, six or eight handle days were big. If the big S&P futures sold of 1 or 2 handles, that was a lot. Currently, 50 handles ranges are the new normal, which is pretty disturbing.

The ES was trading around 2660.00 when Trump blasted out the new $100 million in tariffs, and it dropped down to the 2620.00 area in a few minutes. Then, after an early rally, the futures sold off down to 2584.25. That’s almost 80 handles in less than 24 hours.

To summarize, we live in an ever changing world, where nothing stays the same. Old things we used to use to trade don’t work, and the new things we find that do work get written into a trading bot. While HFT and algorithmic trading are ‘exploiting’ the markets, the big dog in the room is the headline news algos. They have dominated the markets, and President Trump is 90% of it. Is this going to end soon? No way!

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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.}