S&P 500 Futures: Bulls First Winning Streak in Over A Month
After trading in a 43.50-handle overnight range, the S&P 500 futures opened Wednesday’s regular trading hours at 3899.00, went on to trade the morning high of 3911.50 just before 9:00 CT, and then reversed to sell down to the daily low of 3883.50 just after 9:30. Buyers found support at that early morning low which led to a range-bound upper grind for the rest of the morning through the noon hour into the early afternoon when the S&Ps would trade the daily high of 3916.25 just after 1:30 p.m., a 32.75-handle rally from the morning low. Some late-day profit-taking pushed the index down to 3895.50 before settling the day at 3905.50, up 35.00 handles on total volume of an impressive 1.8 million contracts traded. In terms of price action, sellers of the early morning high caught a quick momentum, but buyers of the 9:30 low who were patient were the real winners, covering just after 1:30.
In the Tradechat Room
MiM & SpyGate
Not worth posting pictures of. There was nothing on the MOC for imbalances yesterday as the market tried to make new highs, nobody wanted in or out on the close. That made the 15:50 MOC bar a sell into the close. The last 2-hour trip was a round trip with a high pushed in at 14:45 and then it was profit-taking with about a 15-point round trip.
Spygate was very busy yesterday sniffing out over 350 programs firing off on the tape. Sell programs barely outnumbered buy programs so all in all a balanced tape.
Isreal is months ahead of the US and the world so watching and learning is important as Israel begins a normalized re-opening. Clearly, the vaccines are working dramatically well but they are not going to irradicate covid. We have much to learn about variants, transmission, and length of effectivity. We have no real models we can count on so, like last year, we are pretty much making it up as we go.
Here are a couple of articles that show a glimmer of hope:
New daily cases continue to rise in the Eastern European region.
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
U.S. stocks have hardly reached a “big top” after slumping in the past month, according to Stephen Suttmeier, Bank of America Corp.’s chief equity technical strategist. Instead. the percentage of New York Stock Exchange-listed shares at 52-week highs points to a shift toward lagging stocks and away from leaders, he wrote in a report Tuesday. Monday’s reading climbed to 21%, the highest since December 2016, from a low of 0.1% in September. “Market rotation is alive and well,” Suttmeier wrote.
March S&P 500 Rollover
Today the June contracts will trade in the front month configuration. The rollover, or otherwise known as ‘switch day.’ is the process of ‘spreading’ out of the March contracts and rolling positions into June. In most cases, this process lowers the outright trading volume as traders ‘switch’ to the new month.
Our view, the ES’s overall price action has also switched but this switch has nothing to do with the rollover but rather the direction of the index markets flipping back from selling the rallies to buying the pullbacks. While I did not see a three week decline coming, I never got off the idea of new all-time contract highs. Our view is to fade the opening gap and buy the pullbacks. There is a long line of buy stops in the ES that basically run from 3930 all the way up to the 3960 area. Will the ES go straight up? No, but when Biden signs the $1.9 trillion stimulus bill I believe the futures will have another run to new highs.
Below are some very basic trading rules. While not all still apply, the ones that do remain true to trading the markets.
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.