The S&P futures rallied up to 4404.50 on Globex Wednesday morning and traded 4401.75 on the 9:30 ET futures open, before dropping 16.25 points down to 4386.40 at 9:51 a.m. After a few rally attempts, the ES traded back up to the 4393 area, dropped back down to a higher low of 4386.25 at 10:15, chopped its way back up to the 4400.50 area at 10:33, and sold off to another higher low at 4388.25.
The ES then rallied back up to the 4399.75 area — see what ES 4400 is looking like? — and pulled back down to the 4393.50 area, before double topping at the 4399.75 area at 11:36.
After the push higher, the ES got hit by several sell programs. Just before the selloff I told the MrTopStep trading chat: IMPRO:Dboy :(12:23:01 PM) : shit going to fall
And it did.
From 12:23 to 2:06 p.m., the ES fell 19.75 points down to 4377.50. After the low, the dovish Fed statements short-covered the futures all the way up to 4407.75, up 30.25 points off the low. After a few drops and pops, the ES traded 4399.50 — there’s that 4400 level again — as the 3:50 cash imbalance showed $600 million to buy, traded 4394.00 on the 4:00 cash close and settled at 4392 on the 5:00 futures close, down 2.5 points or down 0.06%.
All that for flat.
In the end, it was a day filled with wild swings. In terms of the ES’s overall tone, it seemed to trade on the weak side. In terms of the day’s overall trade, volume was low up until 1:00 before picking up after the Fed headlines for a total of 1.06 million contracts traded.
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No Baxter today. New model next week.
Chart of the Day
China-dependent U.S. stocks avoiding guilt by association
Doing business in China is one thing and being based in China is another. Stock investors are sending that message as the mainland government clamps down on local companies listed in U.S. markets. It’s reflected in a Goldman Sachs gauge of companies in the Russell 1000 Index with the highest percentage of sales in the Asian nation. The China Sales Exposure index climbed 49% in the 12 months ended Tuesday, beating a 37% advance in the Russell 1000, according to data compiled by Bloomberg. A similar comparison was made by Liz Ann Sonders, Charles Schwab’s chief investment strategist, in a Twitter post Tuesday.
I think the best way to describe the markets right now is it’s the “Dog Days of Summer.” As more masking mandates hit the U.S., more people are trying to slip in vacations before the kids go back to school. Despite the Covid-19 Delta variant spreading all over the U.S., the Fed held firm on interest rates. Powell continues to say that the economy is “strengthening” but we all know inflation is rising.
Our lean: I still think we’re headed lower down, but we can’t forget about the PitBull’s Thursday low. Yes, the Nasdaq stats are weak for Friday, but I don’t think it’s smart to overlook the Thursday/Friday price action. Our lean is to look for some type of low and bounce. 4350-4335 would be a nice level to keep an eye on if you are a buyer but not sure we will see that.
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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