S&P 500 Futures Recap – Trade Date December 30, 2020
Low volume of just 740K contracts for the day lead to a lot of chop even during moves. Overnight the market made a rounded top moving from 3716.50 up to 3738.25, a nice 20 point move that set up a chop zone for most of the night in a 10 point range. A decent selling candle just before the open set the cash open for a rip up as the MOO imbalance was quite positive. High for the day was was near 10 am ET which set up a choppy decline into the close. Our MIM signaled a flat MOC which surprised us with a 1.2B buy and gave some brief upside energy to the market only to see it decline into the cash close.
In the Tradechat Room
A surprise 1.2B buy on the closing MOC sent the 15:50 candle up 5 points, but that closing candle has all that imbalance paired off and we sold down 5 into the close, another up/down trade in the closing 10 minutes.
Daily new case numbers continue to drop as the “SURGE” contiues to grab headlines as the lagging hospitalizations and death are at all highs. It looks like relief is on the way if new cases are an indication.
Wear your masks! Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line) Stay home! Take your Vitamin D!
Chart of The Day
S&P Yearly Returns 2018 – 2020
Today’s abbreviated trading season should follow this week’s low volume grind as more people take time off from trading. As I said yesterday, today’s year-end rebalance is said to be $900 billion but it’s my guess most of that will be paired off.
While I think today should be quiet I don’t think next week will be. There are a few key events that could potentially cause a jump in volatility.
The first is Georgia’s senate race on January 5th which is said to be favoring the democratic candidates and on January 6th Sen. Hawley will object to Electoral College results, ensuring a doomed fight to overturn Biden’s win and the Trump rally in Washington DC. There are 4 competing rallies to demand that Congress overturn the results of the presidential election. Threats of violence, ploys to smuggle guns into the district and calls to set up an “armed encampment” on the Mall have proliferated in online chats about the Jan. 6 day of protest. This has been building up for weeks and the chaos should play out negatively in the stock market. The PitBull said should the democrats win the Georgia runoffs the markets will ‘tank’.
Our view, I have had a good run this week but the lack of volume makes it difficult for my style of trading and I am not going to give one penny back on the last trading session of 2020.
Happy New Year to everyone. Be safe and I’ll see you all in 2021!!!
Danny Riley is a 39-year veteran of the CME trading floor. He ran one of the largest S&P desks on the floor of the CME Group since 1985.
As always, please use protective buy and sell stops when trading futures and options.
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