By the time global markets caught on to the S&P’s big push higher on Tuesday, and early Wednesday, the rally was already over. When there was no major down move in China Sunday night the US markets started to short cover. From Friday’s S&P futures (ESU15:CME) low at 1907.75, to yesterday 1996.00 Globex high, the futures opened sharply higher and started to move lower. Part of the move down was all the buying power being used up before the open, and the other part was the shorts getting squeezed out.
No one ever said the jump in volatility was over, and as the markets head into next week, it’s not just the August options expiration traders are thinking about, it’s also the week of the Federal Reserve’s two day meeting and decision on whether the fed will raise interest rates or not, and then into the September month end quarterly rebalance. Yesterday, the S&P 500 (ESU15:CME closed 21.50 handles lower, down 1.4% at 1943.25. The Dow Jones futures (YMU15:CBT), that were up as much as 225 points in the electronic session, closed down 1.45% to 16270, nearly a 500 point drop from high to low. The Nasdaq futures (NQU15:CME) closed down 1.15% at 4,256.50, and Treasury yields were mixed with the 10-year note declined to 2.179%. Nymex crude oil (CLX5) fell 3.9% to $44.15, and gold futures (GDZ5) closed down 1.6% at $1,102.20 an ounce. In a nutshell, the S&P went up too fast, and when the futures started to fall it was one sell program after another. There were some rallies, but the sellers were hitting bids on the way up and on the way down.
I am going to cut to the chase. The S&P has been overrun with program and algorithmic trading. With the pickup in volatility the algorithms are pushing the markets further than we have ever seen before. While we did see it a few weeks ago, yesterday there were several -1200 ticks to -1300 tick readings. This shows the extreme level of selling that was taking place. In the end, the S&P pushed the markets higher, then pushed the markets lower. As far as the overall trade and volume, it was steady all day, as for the index futures overall tone, it got worse as the day wore on.
MrTopStep Options ‘Collaboration’, Real Traders with Real Ideas
I want to talk about what’s going on at MrTopStep. Next week we are kicking off the September bootcamp. This is when we put all of our traders (including myself) to the test. At the end of the day I am 100% sure everyone will come in with flying colors but that’s not what I want to talk about right now. What I want to talk about is the MrTopStep Options Forum that opens up when we launch the boot camp next week. This truly is the other side of the coin, the missing link to what MrTopStep does, and I want to make sure all you option traders know. Not only will you meet the futures traders in the bootcamp, you will get to meet the option traders also. I want to make this very clear.. the MrTopStep BootCamp is not ‘just’ for futures traders it’s for ‘option’ traders too.
Take a closer look at what the MrTopStep Options Forum has to offer you!
In Asia 10 out of 11 markets closed lower, and in Europe 10 out of 12 markets are trading modestly lower this morning. Today’s economic calendar includes the Jobless Claims numbers, Import Export Prices, Wholesale trade, EIA Natural Gas Report, EIA Petroleum Status Report, 10 Yr-TIPS, and a 30 Yr-Bond Auction.
THE S&P RALLIES EARLY IN THE WEEK AND EARLY IN THE DAY DURING A BEAR MARKET
Our View: Our call yesterday was to sell rallies, and the ESU15 sold off 60 handles from its 1996 day session high to the 1936 low. Late in the day the selling accelerated and things could not have looked worse. Like the title above, the S&P tends to rally early in the week and early in the day, and that’s exactly what happened, it rallied too much early in the day. Can we see lower prices? I think so. The ESU ran the buy stops above 1975, now it’s time to run some sell stops under 1925. Our view is to sell the early rallies and buy weakness. This is just another good example of the PitBulls water in the bathtub, but in bigger size.
There’s still time to sign up for MrTopStep’s LIVE Trading Bootcamp. Spend an entire week trading LIVE with Danny Riley and the rest of the MrTopStep collaborative. This is NOT something you want to miss!!!
And always remember to use stops when trading futures and options…
- In Asia 10 out of 11 markets closed lower : Shanghai Comp. -1.39%, Hang Seng -2.57%, Nikkei -2.51%%
- In Europe 10 out of 12 markets are trading lower : CAC -0.29%, DAX -0.17%, FTSE -0.54% at 5:30 am CT
- Fair Value: S&P -11.67., NASDAQ -14.62. , Dow -115.54
- Total Volume: 2.3mil ESU and 7.6k SPU traded in the pit.
- Economic calendar : Jobless Claims numbers, Import Export Prices, Wholesale Trade, EIA Natural Gas Report, EIA Petroleum Status Report, 10 Yr-TIPS, and a 30 Yr-Bond Auction.
.
.
[s_static_display]
No responses yet