The S&P futures rallied on Globex Thursday night and traded 4379.25 on the 9:30 futures open and traded down to 4372.50. After the low, the ES made a new contract high at 4385.75, pulled back a few points, and then started to hit buy stops all the way up to 4400.00 at 11:33. There it was — the ES finally got to our 4400 target.
The ES pulled back down to the 4392 level and then a big buy program hit that pushed the futures up to 4405.50, followed by a bunch of choppiness. The ES traded to a low of almost 4400 at 3:30 p.m., despite a flat MiM reading that would eventually show $1.2 billion to buy on the reveal at 3:50 p.m. — when the ES hit its session high of 4408.25.
On the 5:00 futures close, the ES settled at 4399.25, up 39.75 points or 0.91%. The NQ settled at 15,091.25, up 162.75 or 1.09%. As of last Friday’s close, it has been 179 days since the ES has pulled back 5%.
In terms of the ES and NQ’s overall tone, they were extremely firm. In terms of the day’s overall trade, volume was low at 1.1 million contracts traded. For the week, the ES closed up 2.7%, the NQ was up 4.25%, the YM closed up 1.55%, and the RTY ended the week up 2.31%
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No Baxter today. New model next week.
Chart of the Day
Digging for gold-mining stocks pans out to Credit Suisse
Gold-mining stocks “still look abnormally cheap,” according to Andrew Garthwaite, a global strategist at Credit Suisse Group AG. He used forward price-earnings ratios to compare the industry group with global stocks in a report Thursday. The forward P/E for an MSCI index of gold miners was 32% lower than the MSCI All-Country World Index’s ratio as of Thursday, according to data compiled by Bloomberg. Both indicators track developed and emerging markets, and the miners’ discount reached 49% last November. Mining shares “have a role in a global portfolio,” Garthwaite wrote.
The focus will be this week’s two-day Fed meeting and earnings. I suspect this will be a market-moving event as Fed officials are set to further their discussions over when and how fast to reduce their $120 billion in monthly bond purchase. Additionally, this week more than one-third of the S&P reports earnings. The big names include McDonald’s, Apple, Tesla, Ford, Exxon, and Amazon.
With the markets up so much over the last few weeks and making new all-time contract highs, one has to wonder if it’s a sell-the-news event.
Our lean: There are five trading days left in July. According to the Stock Trader’s Almanac, the last trading day (Friday) has the Nasdaq down 10 of the last 15. When you throw in the Fed and the earnings, my gut tells me we could see some selling this week.
Our lean is to sell the early rallies or gap up open and buy the pullbacks, thinking there could be some type of flush this week. Keep in mind the type of rebound we’ve seen since last Monday’s low.
Also, the Stock Trader’s Almanac says that August has historically been a dangerous month for the market – August is the worst month for the DJIA, S&P 500, Russell 1000, and the Russell 2000 over the last 33 years. For the Nasdaq… Is it time to put on some protection? It sure seems that way.
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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