S&P 500 Futures Recap – Trade Date December 31, 2020
Late Day RIP to Close 2020
After trading in a 23.75 overnight range, the S&P 500 futures opened Thursday’s regular session at 3723.25 and traded to a 3717.75 low of day in the first half-hour. Then the futures would chop sideways for the rest of the morning maintaining the range through the noon hour. Then at 1:00 CT, heavy buying would push the stock indices higher with the S&Ps maintaining buy pressure into the close making a late day high of 3753.00 before settling the day at 3747.25, up 23.00 handles or +0.62% on total volume of 920K. In terms of price action, it was all about buying the early low and holding into the final hour.
In the Tradechat Room
A nice End Of Year MiM trade as it indicated a decent buy early and our room was humming as the 15:50 MOC was a nice 2.3B to buy with an S&P 500 lean of 92% of symbols having buy imbalances. The reveal had the shorts on the run producing a nice 8 point candle at 15:50 that was extended another 3 points higher before returning to the 15:50 mid-point.
Data is again wrecked for the next two weeks for any type or true trend analysis. This is the current hospitalization, non-trend data, across the US. The dark blue areas are in serious trouble if there continues to be an uprising in cases.
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
First Trading Day Of 2021
I warned my trading forum when the ES was trading 2722 before Thursday’s close to ‘avoid shorting’. I also explained how T+2 worked early last week. What did it all add up to? The big ETF, mutual funds and institutions sell the losers (Tuesday and Wednesday) and then mark up the winners on Thursday’s close. I have said many times they have to ‘sell ’em to buy ’em’ and that is exactly what they did. I have watched how this works for the past 40 years and while we have not seen many +40 handle end of the year rips like that I have seen many late session rips, especially when it’s a half-day. It’s all part of the price action of the Santa Claus Rally that officially ends tomorrow.
Our view, it’s 8:00 Sunday night and the ES is down 2 handles. My lean is for the futures to rally overnight (like they always do on Globex). If they do rally, I’m going to sell the open or the early rally after the open and look to cover on the pullback and get long while keeping a few things in mind. The first part is how much the ES has rallied in the past week keeping in mind the Trump rally in Washington, the Georgia election and the electoral count. I don’t think volume will pick up significantly today but it should throughout the week. Beyond that, I think the ES is going to 3850.
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.