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S&P 500 Futures Recap – Trade Date April 30, 2021
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Chart of the Day
Our View
First Trading Day Of May
The S&P was weak Friday and after a late bounce it sold off to a new low at 4167.25 just before the 4:00 ET cash close. After a week of record tech earnings, the S&P traders took profits on the close. It was a long day of ‘grinding price action’ that could not have looked worse but on Globex Sunday night the futures traded up to 4194.25 around 9:00 PM, up 11.5 points or 0.28%, negating Friday’s decline. In terms of the ES’s overall tone, it acted poorly but not overly. In terms of the day’s overall trade, volume was steady at 1.85 million. Say what you like about the S&P but it’s up 30% since November and isn’t giving up much ground. According to Refinitiv, a record 87% of S&P 500 companies have beat earnings estimates, and earnings look to be growing by more than 46%. The S&P closed out April up 5.2%, the Dow rose 2.8% and the Nasdaq gained 5.4%.Kind of hard to argue with that, huh?
May / June Stats from Stock Trader’s Almanac
May / June disasters happened between 1965 and 1984 with the S&P down 15 out of 20 Mays. Between 1985 and 1997, May was the best month with 13 straight gains, gaining 3.3% per year on average, up 13, down 9. And May begins the ‘worst six months of the year’. A $10,000 investment compounded to $1,068,826 for November to April in 69 years compared to a $1,461 gain for May to October. Memorial Day week record; up 12 years in a row 1984-1995 but down 15 of the last 24 years. Since the 1950 presidential election year, May ranks poorly, #11 Dow, #110 S&P, and #8 Nasdaq.
Our view, traders used to make a lot of money on momentum trading, if the S&P closed weak it was a sale, and when they closed firmly they were a buy, but none of that works anymore and hasn’t for many years. Just think of how many times you have seen the ES puke on the close then rip on Globex? It happens all the time. I have been calling for ES 4600 this year and on Friday Credit Suisse’s chief U.S. equity strategist, Jonathan Golub upped his forecast for the S&P 500 based on strong earnings. “We are raising our 2021 S&P 500 price target to 4600 from 4300. Our lean, there is a tendency for the ETFs and Mutual funds to sell on the last day of the month and put the money back to work on the first few trading days of the new month. I know the MIM was to buy but there was some sector selling on the close so we need to keep an eye on the rotations today. I can’t rule out selling the gap up open but ideally I want to buy the pullbacks. At the ES’s current price at 4193 the S&P is only 15 points off its all time contract high.
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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