PitBulls Friday Low Before Expiration

Charts, Commentary, News, Stocks, Technical Analysis, The Opening Print

Index Futures Net Changes and Settlements:

Contract Settlement Net Change +/-%
S&P 500 (ESU18:CME) 2853.75 -1.50 -0.04%
DowJones (YMU18:CBT) 25,493 -43 -0.16%
Nasdaq 100 (NQU18:CME) 7475.50 +4.00 +0.05%
Russell 2000 (RTYU:CME) 1693.00 +5.90 +0.34%

Foreign Markets, Fair Value and Volume:

  • In Asia 6 out of 11 markets closed lower: Shanghai Comp +0.04%, Hang Seng -0.84%, Nikkei -1.33%
  • In Europe 13 out of 13 markets are trading lower: CAC -1.26%, DAX -1.70%, FTSE -0.69%
  • Fair Value: S&P +0.90, NASDAQ +9.90, Dow -5.85
  • Total Volume: 696k ESU & 296 SPU traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes CPI 8:30 AM ET, Baker-Hughes Rig Count 1:00 PM ET, and Treasury Budget 2:00 PM ET.

S&P 500 Futures: The Pain Trade Continues

After another quiet overnight session, the S&P 500 futures opened yesterday’s regular trading hours at 2958.50, up +2.75 handles. The first move after the bell was down to an early low at 2856.00, and then travelled up to the high of day of 2862.75 after 9:30 am. From there, the ES sold off down to the mid morning low of 2855.25 just before 11:00 am, rallied, made a lower midday high of 2861.25 just after 12:30, and then was quiet into the close as the MiM was flat for the MOC.

However, in the final minutes of the session, the ES sold off rapidly down to 2852.25, completing a 10.50 handle range on the day, and printed 2853.50 on the cash close before settling the day at 2853.50, down -1.25 handles, or -0.04%.

Stock Portfolio Update: Defensive Basket Outperforms

From Stock Traders Almanac: 

NASDAQ just successfully extended its daily winning streak to eight consecutive days. DJIA, S&P 500 and Russell 2000 have not been as strong over the same period. On the surface NASDAQ’s strength is impressive, but it still has failed to eclipse its recent all-time closing high from July 25. And based upon the following Advance/Decline line chart, it could have some trouble doing so in the immediate future.

Since reaching a peak in mid-July, Advance/Decline lines for NASDAQ and Russell 2000 have been trending lower with the occasional blip higher. This is confirmation that the rally is narrowing and fewer and fewer stocks are actually advancing. The divergence between NASDAQ and Russell 2000 compared to NYSE and S&P 500 is another area of concern as it could be an indication that investors and traders could be rotating to more defensive areas of the market.

Stock Portfolio Updates

Over the past three weeks since last update, S&P 500 climbed 1.5% through yesterday’s close. Russell 2000 slipped 0.3% over the same time period. Overall, the entire Stock Portfolio climbed 0.3% excluding any dividends or trading fees. Mid-caps performed the worst falling 0.2%. Large-caps were best adding 1.4% while Small-caps edged higher by 0.2%. Compared to the S&P 500, the overall portfolio’s performance lagged due to a still sizable cash position and three positions being stopped out.

June’s basket of Defensive Stocks is performing nicely. Of the 21 stocks selected eighteen are positive, one is negative and two were recently stopped out. Including the stopped positions, the basket’s average performance is 4.7% compared to a gain of 2.7% by S&P 500 over the same time period. TE Connectivity (TEL) is the worst laggard still held in the portfolio, off 4.3%. This is a modest improvement from last update’s 6.6% decline. Intel (INTC) and Western Digital (WDC) were both stopped out on July 27. INTC has recovered modestly, but WDC is even lower now.

Of the nineteen remaining defensive positions, five are up double digits. The best performing position is still McCormick & Company (MKC), up 14.5% so far as of yesterday’s close. Not far behind is Church & Dwight (CHD) up 12.5%. You may not immediately recognize this company, but chances are you have at least one of their products in your home at this moment and possible more. Some of its brands include: Arm & Hammer, Oxiclean, Nair, Orajel, First Response, Waterpik and Trojan.

Global Brass and Copper Holdings (BRSS) recent struggles with the decline in copper price came to an end when they reported Q2 earnings a week ago. Solid earnings results along with a 50% increase in their quarterly dividend and the announcement of a share buyback program was more than enough to end the recent retreat in share price. BRSS climbed 14.8% since last update as a result.

Thus far, the market has proven to be quite resilient, but it is still early August and midterm elections are still about three months away. Tariffs, the Fed or some yet unknown geopolitical issue could still spark a meaningful pullback during this historically unfavorable time period. Cash and defensive positions held in the portfolio can provide some level of protection during this period. All positions in the portfolio are currently on Hold. Please see portfolio table below for updated stop loss suggestions.


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. Any decision 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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Danny Riley (2872 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.

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