Market Review
S&P 500 Futures Recap – Trade Date July 9, 2021
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SpyGate: Trend day up, large buy on the close
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Baxter: Bad week for AI trading.
Baxter is our emerging AI product. As we build out our datasets and refine, we will begin tracking real-world AI market predictions. Today’s OHLC prediction is influenced by temporal data (Day of week, year ..) and the OPEX cycle. Baxter is not very smart yet, but he should get better. Here is what he thinks will happen today. This is the SPX index, not futures. You will need to add today’s fair value (-8.55 ) to the data to adjust.
We will also get better at presenting Baxter’s thoughts.
No retrained Baxter yet. Still shooting high and low.
Chart of the Day
Our View
S&P Makes 37th Record Close, Up 16% YTD
The S&P 500 continues to go straight up. The melt-up that started June 21st has pushed the S&P futures from below 4130.00 up to 4364.00 in just 13 sessions. When I told the PitBull that the imbalance was $4 billion to buy on Friday, he said “The fix was in. They knew Thursday they were going to do this.”
I understand that a lot of people disagree that the rally is a technical breakout, but it’s not. It is supercharged and fully backed by the U.S. government and the U.S. Federal Reserve.
I have said many times that I have been part of every major stock market move since 1985. I have seen a lot of big rallies but none like this record run. Big money buys stocks when it goes up and they buy when it goes down. There are billions and billions of dollars waiting to be put to work in the stock market as investors continue to wait for a big decline that never seems to come. When you combine that with the “nowhere to go but stocks,” there seems like there’s no way to stop it.
The S&P is clearly a runaway train!
The ES had its worst day in three weeks (on Thursday) before bouncing to new all-time contract highs on Friday. The ES traded 4331 on the 9:30 ET open and ticked down about three points down to 4328.25. That was the low for the regular hours trading session as the ES put in six straight green hourly handles. The breadth was there too, with an 86.7% upside volume day on the NYSE. On the NASDAQ, it was 78%.
In the end, it was a hell of a week for the bulls. The ES can close lower one day and maybe down two in a row, but three declines have been hard to come by. In terms of the ES’s overall tone, it was firm all day. In terms of the day’s overall trade, volume was steady at 1.26 million contracts traded.
Our View
Factset analysts project profits to rise 64% in the second quarter from a year earlier, a growth rate that would be the highest in a decade. Obviously, that’s as we lap the Covid-19 impact though.
In any regard, earnings kick into gear this week, starting with the banks. JPMorgan (JPM) and Goldman Sachs (GS) report tomorrow morning, along with PepsiCo (PEP). Wells Fargo (WFC), Bank of America (BAC), Citigroup (C), and Delta Air Lines (DAL) all report on Wednesday morning.
In most cases, stocks do not sell off as earnings are reported — they tend to pull back after. PitBull called for a July 6th reversal and he nailed it, but my selloff target date is after a bulk of earnings and more toward the end of July. That said, I want to make things perfectly clear, I am a bull and any selloff or pullback will be a buying opportunity. Below is a chart provided by Bespoke showing the largest companies that are set to report earnings over the next two weeks.
Our lean, I think there could be some early week weakness. Sell the early rallies and buy the pullbacks. Avoid the 11:00 to 2:00 chop and come back and play the close. ES 4400.00 is not far off but it won’t be as easy as ES 4300 was.
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.
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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