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S&P 500 Futures Recap – Trade Date April 28, 2021
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Chart of the Day
Dave Wilson’s Chart of the Day
Tesla’s Bitcoin Investment Fails to Bring Coattail Effect
Tesla Inc.’s decline after reporting first-quarter results underscored its inability to ride the coattails of a profitable investment in Bitcoin. Shares of the electric-car maker slid 4.5% Tuesday, while the digital currency rose 3.6%. The contrast in performance is even sharper since Feb. 8, when Tesla disclosed the purchase of $1.5 billion in Bitcoin. From that day through Tuesday, Tesla sank 17% as the currency climbed more than 40%. The company made $101 million in the first quarter from Bitcoin sales. Chief Executive Officer Elon Musk tweeted that 10% of its holding was sold.
Our View
Can the Nasdaq Rally After Tech’s Blowout?
Dare we say it’s been a boring couple of days? The ES has traded in a painfully tight trading range over the past few days. On Monday, it gained 8 points or 0.19%. On Tuesday it slipped a half point and on Wednesday it fell less than three points.
That’s despite an earnings bonanza this week, along with the FOMC meeting kicking off on Wednesday at 2:00 PM, which we covered extensively in yesterday’s Opening Print. Jerome Powell & Co. didn’t do much to surprise us. The Fed remains as dovish as ever and will continue its easy-money policy for the foreseeable future. The Fed said it won’t raise rates even in the presence of transitory inflation.
While the S&P 500 continues to hover near its all-time highs and the market looks tired, we have a dovish Fed — don’t fight the Fed! — and strong earnings from FAANG. Alphabet reported revenue ~$55 billion on Tuesday, which beat expectations by $4 billion, although it didn’t hold the key level we were watching in Wednesday’s session. Facebook reported a strong result on Wednesday though, and Apple absolutely obliterated it. Qualcomm did well, too.
Last quarter, Apple beat EPS estimates by 18%, while revenue of $118.4 billion came in $8.2 billion ahead of estimates. Well, this quarter was even better. Earnings of $1.40 per share came in more than 40% ahead of estimates and revenue of $89.6 billion beat expectations by more than $12 billion. Let’s put it this way: The highest expectations on the Street called for earnings of $1.09 per share and revenue of $83.2 billion. The company easily topped these numbers.
Oddly though, shares only finished higher by 2.3% in after-hours trading. Let’s see if shares can clear $138 and make a run to new all-time highs. If Apple, FB, and GOOGL trade well — and remember, Amazon reports today — it’s hard to imagine the Nasdaq not rallying with its largest components.
Our View: The market looks tired and the bulls have been lining up behind the good news. We had Biden’s address to Congress last night, a recent FOMC meeting, and more earnings are on the way. It’s hard to imagine tech sinking after so many great reports and they could help keep the market propped up even in the face of poor price action. If there’s a dip, I expect it to be shallow for the time being, although 4,150 to 4,160 in the ES isn’t out of the question.
As we all know, there’s no crystal ball when it comes to trading stocks, options or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk free for 30 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.
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. Decisions 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
