Market Review
Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2885.00 | Opening Print: 2850.25 |
| Low: 2788.00 | High 2985.00 |
| Volume: 540,000 | Low: 2821.00 |
| ES Settlement: 2869.00 +39.5 Handles +1.39% | |
| Total Volume: 1.9M |
S&P 500 Futures: ES Ends Higher But Buying Power Is Weak
The ES traded 2850.25 on Friday’s 8:30 CT futures open, rallied up to an early high of 2854.00 and then sold off down to 2821.00 at 10:30 CT. After the low, the ES rallied all the way to 2844.00 at11:53 and then sold back off down to the 2844 level at 1:37
At 2:00 CT the ES traded 2839.00, traded 2845.50 at 2:30 and traded 2868 as the 2:50 cash imbalance MiM showed $800 million to sell. On the 3:00 cash close, the #ES traded 2863.50 and settled at 2869.00, up 39.25 handles or +1.39% on the day.
In terms of the ES’s overall tone, it was firm but some of the buy programs didn’t have the buying power they have had over the last several days. In terms of the day’s overall trade, total volume was better but still on the low side at 1.9 million contracts traded minus 540,000 from Globex making total day volume 1.36 million contracts traded on the day session.
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Economic Calendar
Closing Prices
In the Tradechat Room
MiM
Options expirations create some large MOCs and last Friday was no exception. Our 3.6B dollar imbalance sent our 3:50 pm ET candle up a decent 15 handles. There is a pattern appearing that the 3:50 candle has been retracing, so a counter trend trade looks to be setting up on the 3:51 candle. Write that down in you notebook.
Questions? Please email me: Marlin@mrtopstep.com
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Chart of the Day
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Our View
Big Week Of Corporate Earnings Ahead
I started out Friday’s trade losing money and after a few more losers I called it a day. Fridays have never been my day and it was starting to feel like I was playing pinball. I have been doing my best to not look at every tick because I react too fast when I do. So I am hoping for some better trades this week as it seems like a lot of the easy money has kinda disappeared.
After logging two start weeks of gains traders seem to have an optimistic view of reopening the US economy and the potential of a new coronavirus treatment. This week’s earning schedule includes Amazon (AMZN), Delta Air Lines (DAL), Netflix (NFLX), Chipotle (CMG), Coca-Cola (KO) and International Business (IBM). I expect it to be a busier week than last week.
As you all know I have not been that bearish lately. Most of that has to do with all the money the government and the fed are throwing at the public and the economy. Clearly the PPT has not been shy. That said, the ES could be facing another stumbling block and that comes in the form of crude oil. My guess is with crude trading down to $17.00 that there are going to be a lot of US frackers filing for bankruptcy. Of the 40 shale companies that we saw with very limited free cash flow above CapEx, the debt obligations from 2020 to 2026 total approximately $100 billion. This is systematic not just of those 40 companies but the US independent oil producers and even the majors. As long as shale firms could keep borrowing and losing money to drill new wells, producing more oil was simple. When profits weren’t a concern, the debt-heavy business model worked. But similar to other boom and busts, if you want to stay in business, you need to make a profit. At the current price of $17.00 or even at $30.00 the shale industry will still not be able to pay its bills and oil storage is reaching its limit. So even if some frackers can survive where will they find storage? While oil has not had much effect on the S&P recently it will have a hard time overlooking it as more frackers file Chapter 11 and the price continues to drop. Our lean, I thought there would be a late Friday Rip and I also thought being short over the weekend was the call but with the ES down 25 handles it makes it hard to sell. In most cases when the ES is down Sunday night it short covers before the 8:30 open and ends up a buy weakness day but if oil tumbles further I think selling the rallies maybe the correct call.
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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