Market Review
Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2876.00 | Opening Print: 2868.75 |
| Low: 2825.00 | High 2868.75 |
| Volume: 510,000 | Low: 2768.00 |
| ES Settlement: 2819.00 | |
| Total Volume: 2.5M |
S&P 500 Futures: ES Down 4.25% In Two Days
The S&P 500 futures (ESM20:CME) have dropped 4.25% in the last two sessions. The decline is a combination of the index being extremely overbought and a wave of negative headlines. Many believe that the current weakness over the last few days is the start of the long awaited ‘retest’. Earlier this week Goldman Sachs said that COVID19 cases may accelerate as states begin to relax shelter-in-place rules and warned of an 18% stock market drop. Personally I think things are just starting to catch up to the S&P and as more negative economic news hits the ES will start to go down hard.
Yesterday the ES traded 2857.75 on the 8:30 CT futures open, traded 2860.25 at 9:32 and sold off down to 2832.75 at 8:37. The ES then traded back up to 2845.75. After some back and fill price action the ES rallied up to the high of the day at 2869.75 at 9:31 and then dropped 83.75 handles down to 2786.00 at 2:25.On the 2:50 cash imbalance the ES traded 2807.25 as the MIM showed buy $ 1 billion, traded 2811.00 on the 3:00 cash close and settled at 2819 on the 3:15 futures close.
In terms of the ES’s overall tone it was all about selling the rallies. In terms of the day’s overall trade, 2.5 million ES traded with 510,000 traded on Globex making total volume 1.9 million, the highest volume in over 3 weeks.
Economic Calendar
Closing Prices
In the Tradechat Room
MiM
Buy when the market is down. This was an unusual MIM that was quite positive for a negative day. I assume we had some rebalancing going on. The one thing I stress about the close is that it is mechanical. Funds have to make the trades regardless of market, moving averages, fibs, etc. This is why you can throw all that out in the closing hour. Either you understand and stay alert or don’t trade it. The market accelerated selling at 3 pm down to 3:25 pm where the MIM was telling us a decent buy was brewing. I didn’t really believe it was real on what was working to be a very negative nine to one down day. I should have. The market turned and rallied into the revel and stayed in a 9 point range into the close.
This opening MOO will tell us a bit more about posturing into the 2nd half of May.
Questions? Please email me: Marlin@mrtopstep.com
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Our View
Fed’s Powell: Outlook ‘Highly Uncertain’
Federal Reserve Chairman Jerome Powell’s 9:00 ET speech didn’t lay out a pretty picture for the US. Powell revealed growing concern about the path ahead and said the outlook was highly uncertain and subject to significant downside risks and went on to say “There is a growing sense that the recovery may come more slowly than we would like…and that may mean that it’s necessary for us to do more,” he said, urging the White House and Congress to spend more money to ensure the economy’s rebound. That was really all the markets needed to hear. All day long it was small pops and bigger drops.
Our view, the first thing I want to point out is we have not seen many 3 day declines recently and the other is called dividend reinvestment. Dividends are generally paid out four times a year or quarterly and put back to work in the stock market at mid-month. While many people believe mid-month falls on the 15th it really starts on the 14th which is today. While I really do not like the S&Ps price action I also don’t want to get ahead of myself. Our lean, buy the pullbacks. I think we are going back to 2850-2860.
Danny Riley is a 39-year veteran of the CME trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.
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As always, please use protective buy and sell stops when trading futures and options.
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