|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3900.50||Opening Print: 3896.00|
|Low: 3888.75||High 3909.75|
|Volume: 135,000||Low: 3887.00|
|ES Settlement 3909.00|
|Total Volume 930,000|
S&P 500 Futures Recap – Trade Date February 8, 2021
S&P 500 Futures: Lowest Volume of the Year
After trading in an 11.75-handle overnight range, the S&P 500 futures opened Monday’s cash session at 3896.00, traded to the morning high of 3903.00 at 9:15 CT, and then reversed to sell down to the daily low of 3887.00 just before 11:00. During the remainder of the morning, noon hour, and early afternoon, the S&P futures traded sideways until the final half-hour of the session when a heavy wave of buying pushed the ES up to a daily high of 3909.75 before settling at 3909.00, up 28.75 handles on low volume of 930,000 contracts. In terms of price action, it was all about selling the early morning high, buying the midmorning low, and holding into the close.
In the Tradechat Room
No real imbalance on the MOC as rotation continues to be the mode of the close.
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The US continues to lead the world in the number of vaccines administered.
In the per capita space, UAE has taken the top spot from Israel as they have approved both the Russian Sputnik and Chins Sinopharm vaccines which should give us some great data in a few months. The US is struggling to get to 0.5% daily vaccinated. That would take 200 days at this rate to vaccinate everyone.
Israel has 41% of its population vaccinated at least once compared to 9.7% in the US and 18% in the UK. The UK has not been reserving 2nd does shots, choosing instead to vaccinate as many people as possible with the sparse inventory.
The US leads the UK in fully vaccinated (two doses). Two very different choices. Israel now has 25% of their country fully vaccinated.
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
Earnings growth for U.S. companies was supposed to return this year, judging by analysts’ estimates. Now it looks like that already happened. Companies in the S&P 500 Index are in position for a 3.6% increase in fourth-quarter profit, according to data compiled by Bloomberg. The figure reflects results from the companies already reporting and estimates for those yet to do so. When last quarter ended, analysts expected S&P 500 profit to decline 8.8%, which would have been the fourth straight quarterly drop.
The higher the ES goes; the thinner it gets. Many times when volumes are low it favors the upside but it can also be a danger sign. When the markets are ‘bid’ the algos are and when the markets are offered so are the algos. Unlike humans, bots have no preference. By design, they take advantage of both ‘high and low’ volumes. The bots do not discriminate, they will run the upside stops and then run the sell-side stops and… do it over and over again. The exchanges say ‘bots’ supply liquidity but in reality, they cause chaos by stretching the ranges out and taking the markets from one extreme to another. I don’t care how smart you are, there is just no way to tell what the bots are going to do next.
This week the stimulus talks are set to resume and the Trump impeachment proceedings continue. We live in a brave new world, nothing stays the same for long but the one constant that doesn’t change is the ‘buy the dip’ mentality and I do not think that’s going to change anytime soon. Low jobs, increased covid deaths, and S&P and Nasdaq, now at all-time contract highs, have closed higher six days in a row. The Dow closed up 0.80% after posting its biggest one-week advance since November. All three indexes ended the day at a record. Daniel Morris, chief market strategist at BNP Paribas Asset Management said “It’s like your birthday and Christmas on the same day, and the markets are all happy,”
It truly is the gift that keeps giving. According to FactSet, Market stocks have also been buoyed by an upbeat set of earnings for the holiday quarter from large U.S. companies. Of the 295 companies on the S&P 500 that had reported by early Monday, 81% had beaten analysts’ expectations for earnings growth.
Our view, I think we are getting close to a 30 or 40-handle pull back but not yet. I still think there is another push up to my 3920 level or higher. Our lean is to sell the open of the early rally if the ES gaps higher and buy the pullback. The 30-year Treasury hit 2% for the first time since the pandemic.
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.