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Chart of the Day
Technology stocks rarely trail the rest of the S&P 500 Index’s main industry groups for a quarter. It’s even less common for the index to rise when tech ranks last out of the 11 sectors. Yet both are poised to happen this quarter. The S&P 500 Information Technology Index is in position for its second last-place finish since 2008, according to data compiled by Bloomberg for the first quarter. During the same period, the S&P 500 rose 5.4%. Any advance would be the first since 2004 for a quarter when tech, which has the S&P 500’s highest weight at 26%, was the biggest laggard.
Our View
First Trading Day April
I am not going to do a big view today. The only thing I messed up yesterday was saying sell the early rallies and buying weakness. The problem with that is the ES and NQ went straight up. Why? Because the rebalancers bought TECH. This week isn’t over, today, the first trading day of April is bullish. The Dow and the bond markets will be closed for Good Friday and it looks like we may see a solid jobs report. Thus I am staying long. In terms of the S&Ps overall tone, it was very firm but the Nasdaq led the way. In terms of the day’s overall trade, volume was low for the size of the move.
MIM Sell 5.4 Billion
Whenever the S&P rallies so much so fast it uses up a lot of buying power. As I have said many times after a big rally the ES tends to go sideways to down. I am not saying that will happen today but the best way to rebuild the buying power is for a good 20 or 30 handle pullback. Do the odds favor that? I don’t know but when everyone gets bullish into a high, compliancy rises. Moral of the story; I think higher prices, how you get there is all that matters. Our lean is to buy the pullbacks, 3390 to 4020 in on TAP. Lastly, the $5 billion they sold on the close yesterday will show back up on the buy-side and will be rotated back in the coming days.
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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