After trading in a 49.75 handle overnight range, the S&P 500 futures opened Thursday’s cash session at 3688.25, up 12.00 handles, traded a morning high of 3697.50 and then sold to a morning low of 3688.25 all before 9:30. The rest of the morning would maintain the first-hour range until the buyers pushed the ES up to 3701.25 at 12:30.
From there the rally would stall out, and sellers would own the afternoon with the S&Ps pushing down to 3674.50 in the final minutes before settling at 3678.00, up three ticks on the day. In terms of price action, it was all about buying the 9:30 low and then fading the 12:30 high. Volume was light having just missed a million contracts traded.
In the Tradechat Room
Thursday was an early close so MIM data started after 11 am ET. It developed a buy lean of 77% symbols around 12:30 and at the 12:50 reveal it was over 800M to buy. A nice 5=point move up into the close.
It’s been a few days and the Covid Tracking chart has improved moving from 22 states with falling new case numbers to 43 and just Washington state showing growing cases. Caution, though, as the data from the weekend has been corrupted due to the Christmas holiday. We need to check in during the week to see if we are truly improving.
Wear your masks! Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line) Stay home! Take your Vitamin D!
Chart of The Day
Day Three Of The Santa Claus Rally
I wrote about the Santa Claus rally last Monday. To remind you of how this works I will re-explain. The expected rally starts on Thursday, Christmas Eve and lasts until the second trading day of January with an average gain of 1.3%. Helping this idea will be the low holiday volumes and hindering the rally will be some type of wayward Trump headline and the end of the year rebalance.
Our view, if you’re playing the Santa Claus rally you’re already long or should be looking to buy a dip/pullback. As always I am not saying you can’t sell open/early rally but ideally, I buy the dip.
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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