Market Review
S&P 500 Futures Recap – Trade Date July 2, 2021
Economic Calendar
Closing Prices
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Market On Close : July 4th Imbalance. Bang!
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Baxter: First predction
Baxter is our emerging AI product. As we build out our datasets and refine, we will begin tracking real-world AI market predictions. Today’s OHLC prediction is influenced by temporal data (Day of week, year ..) and the OPEX cycle. Baxter is not very smart yet, but he should get better. Here is what he thinks will happen today. This is SPX index, not futures. You will need to add today’s fair value (-8.93) to the data to adjust.
open: 4351.0695468521235,
high: 4359.6115547074305,
low: 4341.098447909953,
close: 4350.084578143244,
We will also get better at presenting Baxter’s thoughts.
Chart of the Day
Aristocratic dividends in U.S. stocks suit Credit Suisse
U.S. companies with a track record of raising dividends have become “abnormally cheap,” according to Andrew Garthwaite, a global strategist at Credit Suisse Group AG. Garthwaite endorsed the so-called dividend aristocrats in a report Thursday. Valuations of the S&P 500 Index’s aristocrats relative to the U.S. stock benchmark fell as much as 5.5% from a high on May 13 through Thursday, according to data compiled by Bloomberg. The decline is based on forward price-earnings ratios, which Garthwaite cited in the report.
Our View
S&P 500 Notched 7th Consecutive New All-Time High Close
Holy smokes! The S&P 500 futures (ESU21:CME) took out my 4340 level just after 2:00 ET Friday afternoon. I know people like reading my ‘ES Recap’ but it’s hard to write because it’s the same thing every day: A small pullback and then new contract highs. As I mentioned in the MrTopStep chat, this rally is not like 1999-2000, it’s well beyond it.
Helping the bulls’ cause, 850,000 people joined the workforce, the highest in 11 months. The futures traded off slightly on Globex Thursday night into Friday morning but started to short cover before the number. After the jobs number, the ES down ticked and quickly shot higher. The ES traded 4322.00 on the 9:30 ET futures open, dropped down to 4319 at 9:54, and after that, several buy programs fired away, pushing the ES up to 4332.75 just before 12:00.
The ES had a small pullback down to 4329.50 and in less than 30 minutes traded 4341.00 at 1:06. After another small pullback, the ES took out the high by three ticks up to 4341.75, completing my call for ES 4340. After some sideways to lower price action, the ES dipped to a low of 4337.75 as the MIM started to show a couple hundred million to buy. The ES traded 4338.25 on the 4:00 cash close and settled at 4342.75 on the 5:00 futures close.
In the end, total volume over the holiday abbreviated trading session was 216,000 from Globex, 81,000 during yesterday’s holiday session (Monday) and 720,000 traded during Friday’s day session, making total volume at 5:00 Monday evening making for a total of 1.017 million contracts. In terms of the day’s overall tone, the markets continue to march forward unabated.
The real question is how long can the rally continue? Generally, this is part of the premium part of the newsletter but I’ll give you my feel and some advice from the Pit Bull.
We all know the markets are way overextended but they have been that way for several weeks. I think we see a July pullback but not until after the earnings. The PitBull said that he has seen many highs made around July 6th. I think we all agree that the S&P is overdue, but picking highs is one of the hardest trades you can make. It’s fighting the trend and the Fed, two things that are not advisable. The PitBull also said that “There is a 10% correction every year” — it’s just a matter of when!
Our view: I covered my long NQ up 210 points on the trade. The S&P has made 7 record high closes in a row. The record is 8 consecutive closes at new highs. The VIX closed at $15.07, down 2.65% and volume is extremely low. CNN Fear & Greed Index, the Bank of America Bull/Bear indicator, and the AAII Investor Sentiment Survey are showing no signs of fear or greed, which is a bit odd at this point of the rally. Could that add more fuel to the fire of this “melt-up?”
In fact, AAII Investor Sentiment survey shows a rise in bullishness that is well above its historical average of 38% and also well below April’s high of 52.7.
Our lean, I usually regret getting out of my long positions but this time I am doing it at a high, not after a high and dip. A lot of times the week of the 4th of July is quiet and there is a light economic schedule, but the Fed minutes may be market moving. That’s on Wednesday. Our lean: Sell the early rallies and/or the gap-up open and buy the pullbacks cautiously. It may be thin to win but that can’t last forever.
As we all know, there’s no crystal ball when it comes to trading stocks, options or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk free for 30 days.
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
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