Economic Calendar
Closing Prices
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Market On Close – $2.3B, nice end of the week.
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Chart of the Day
Momentum-stock investing just became cheaper
Favoring the fastest-rising shares has become a much cheaper investment strategy, thanks to an emergence of industries such as energy and finance as market leaders. The MSCI World Momentum Index shows as much. The indicator consists of stocks in 23 markets with the biggest price changes over six and 12 months. Two weeks ago, the index’s valuation relative to projected earnings tumbled 39% after a twice-yearly overhaul was completed, according to data compiled by Bloomberg. The plunge was highlighted by Michael Venuto, chief investment officer at Toroso Investments, in a Twitter post Thursday.
Our View
S&P Closes Out The Week On New Contract Highs
The S&P rallied on Globex and traded 4235.75 on Friday’s 9:30 futures open then slowly traded lower. Just after 11:00, the futures traded down to their early daily low at 4223.75, rallied, and double topped at the 3229.50 area. The ES eventually made a new low of 4221.50 at 12:46 and then slowly started to move higher on a short-covering rally. At 1:42 the ES was trading 4227.00, down 2.5 points or -0.06% on the day.
In terms of the ES and NQ’s overall tone, it was a grinder — just what the above paragraph sounds like.
It’s exactly the same price action we’ve seen for the last two weeks: Rally off the open, sell off and then bounce. It’s all part of the low-volume “water in the bathtub” trade. Push the water one way and then push it the other way. Splish, splash. Splish, splash. Clearly, this is part of a new algo.
In terms of the ESU’s (September ES contract) overall trade, volume was miniscule. In the September ESU contract, 93,000 traded on Globex and 515k on the day session for a total of 609,000. The volume was even lower when we subtract out the spreads from the June contract, which expires this week. I understand that most traders will say, “it’s because of the roll over,” but I don’t agree.
I think the higher the S&P goes the less interest there is, and when you throw in the low VIX and a reopening country, more people are taking time off.
Our view: The ESU traded up to 4243.75 on Globex. I still think it goes higher, but I also think the upcoming Fed’s two-day meeting on Tuesday/Wednesday might stall the rally for a few days. Sell the early rallies and buy the pullbacks. 4250-4255 is on TAP.
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
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