|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3843.50||Opening Print: 3827.50|
|Low: 3825.75||High 3840.00|
|Volume: 170,000||Low: 3807.75|
|ES Settlement 3831.75|
|Total Volume 1.2 M|
S& P 500 Futures Recap – Trade Date February 3, 2021
S&P 500 Futures: Up 3 In a Row
After trading in a 17.75-handle overnight range, the S&P 500 futures opened Wednesday’s cash session at 3827.50 and traded a 3833.75 early morning high before selling down to the daily low of 3807.75 just after 9:30 CT. From there, buyers would come in and steadily push the ES higher through the rest of the morning, noon hour, and into the afternoon, printing a daily high of 3840.00 just after 1:00. The rest of the day saw profit-taking push the S&Ps down to 3821.00 before settling at 3831.75, up 13.75 handles on modest volume of 1.2 million contracts. In terms of price action, it was all about buying the first hour low and holding until 1:00.
In the Tradechat Room
The MIM was an early buy in the 14:00 hour but the waning #% (number of symbols on the buy vs sell-side) was never leaning strongly to the buy and in fact, by 14:45 switched setting up for a MiM reversal where we move from a buy imbalance to a sell imbalance. The dollar imbalance did not switch for us until 15:45 but the #% was the hint it was coming (along with the price action). The 15:50 reveal was about 1.7B to sell and when the dquotes joined at 15:50 they agreed and the market sold a nice 8 ES points into the close.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
The U.S. continues to improve, TX is the lonestar state that really had not been able to reverse the daily case trend as seen below.
Wear your masks!
Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line)
Take your Vitamin D!
Chart of the Day
Chicago corn futures climbed to above $5.5 per bushel, a level not seen since July of 2013, driven by strong demand for US supplies and supply disruptions in Argentina. The US Department of Agriculture’s weekly export sales report is expected to show record corn sales. Meanwhile, Argentine agricultural exports were disrupted after truckers blocked roads around Buenos Aires’ key export terminals to protest taxes and fuel prices. Corn futures are expected to remain bullish as some believe that Chinese corn imports could surpass the USDA forecast of 17.5 million tonnes in 2020/21.
How The Short-Sellers Get Used
I may not have the exact details but let me explain how I think the short-sellers ‘get used’ During the first part of the decline the dip buyers get run over. After the ES is clearly weak, the ES sellers come flying in because no one wants to miss the ‘big one.’ As the ES continues to weaken, the big investment firms and hedge funds protect their long stock positions by selling futures or buying puts or selling calls as the hedge. In the first few days of the decline, volume is high but into the third and fourth days of the decline, the new lows are met with shrinking volume. Then the big gap down on Sunday night on Globex and a drop after the open, it all looks so bad. Once the sellers get off base and sell at low prices they immediately enter buy stops. As the volume dries up the same cash buyers that buy stocks whether the markets are up or down continue buying. Once the premiums between the ES futures and the S&P cash start widening out, the same algos and HFT programs that helped push the markets down are starting to do buy programs to start chasing stops. Clearly, in this scenario, the cash buyers use the shorts to fuel the markets higher causing a short squeeze. Like I said yesterday, it really is a myth that the markets go down faster then they go up.
Our view, the markets are still going up but after an almost 200 point rally in the ES, I can’t rule out some pullbacks. Our lean is the same as yesterday, you can sell the early rallies and buy the midmorning pullbacks or just be patient and buy the pullbacks. Jobs Friday is on TAP.
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.