We’re into a frustrating stretch here with the markets. As you can tell, traders and fund managers are hitting the beaches or the airports and taking some time off. 1.02 million contracts traded on the ES, well below the 1.4 million average over the last 20 days.
Again, the S&P 500 and ES are bubbling within inches of new highs — a new mark is just a few points away. Yet, it’s as if there isn’t enough volume here to take it higher.
On Wednesday, breadth was pretty strong across the Nasdaq, Russell, and Dow in the opening 30 to 60 minutes. However, that breadth faded throughout the afternoon as we got a “late-day walk away” in indices.
In other words, after we tried to get a push higher in the morning and failed, the ES simply chopped about throughout the day before fading lower into the close. Both sides — bulls and bears — seem to lack the strength to drive a breakout or a breakdown.
SpyGate is now available free to members of IMPRO and MIM trading room. Join the MiM.
Chart of the Day
S&P 500’s Broad Stock Gains Are Seen as ‘Technical Pillar’
Gains among U.S. stocks are broad enough to make it “very difficult to turn negative,” according to J.C. O’Hara, chief market technician at MKM Partners LLC. O’Hara cited an indicator that tracks the daily gap between the number of rising and falling shares in the S&P 500 Index. The cumulative advance-decline line climbed to a record Friday, according to data compiled by Bloomberg, even though the S&P 500 last set a new high on May 7. “Breadth is the strongest technical pillar for the current market,” O’Hara wrote in a report Sunday.
S&P and Nasdaq: Late-Day Walk Away. Now What?
All week the S&P has been held back by today’s release of the US CPI (Consumer Price Index) which should provide a good look at where ‘inflation’ is headed. Yesterday’s muted trade saw the S&P close down 0.1% and the Nasdaq settled -0.3% lower. For the last two weeks the index makers have been stuck in narrow ranges and yesterday the S&P climbed to just 1 point off its all time high then fell. The data due out at 8:30 ET will follow April’s CPI data that rose the most in any 12 month period since 2008 and we expect another big gain for May.
Our view: Clearly the markets have been waiting on today’s data. This week the ranges in the ES narrowed and buy stops continue to build above the 4237.70 level. It seems unlikely that the ES will remain stuck in this trading range. My feeling is the ES is just one big buy program away from new highs but I have been thinking this for several days to no avail. You can sell the rallies and buy the pullbacks or just be patient and buy weakness. 4265 is in the cards, it’s just a matter of when.
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