Market Review
Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3096.75 | Opening Print: 3079.00 |
| Low: 3027.25 | High 3113.75 Late |
| Volume: 380,000 | Low: 3066.25 |
| ES Settlement 3112.75 | |
| Total Volume 1.39 Million |
Mondays S&P 500 (ESU20:CME) Trade
The S&P futures opened at 3079.00 on Monday’s 8:30 CT futures open, traded down to 3066.25 at 8:42, and then got hit by several buy programs that pushed the futures up top 29.25 handles to 3095.50 just before 9:30. The ES pulled back down to a higher low at 3077.00 then rallied 30 more handles up to 3107.50 at 11:47. After falling back to 3095.75 the ES rallied up to the 3010 level at 2:12 CT. The ES traded 3100.25 at 2:50 as the Mim showed $1 billion for sale, traded 3105.00 on the 3:00pm cash close and settled at 3112.75 on the 3:15 futures close.
In terms of the ES’s overall tone it was all about a ‘choppy, back and fill’ price action that took all day to push the futures up on the close. In terms of the day’s overall trade, volume was low. When you take out the 368k from the total volume 992k, the lowest day session volume in several weeks.
DATA/HEADLINES: 9:45ET Markit Manufacturing Index flash (48 exp), Services flash (46 exp); 10:00ET New Home Sales (2.9% exp); 1:00ET 2 Year Note Auction, Fed’s Bullard speaks.
The focus in Congress today is on coronavirus, with Anthony Fauci to testify in the House and the Senate to hold a hearing on China’s culpability for the pandemic. The Bloomberg Invest Global summit continues with speakers including Treasury Secretary Steven Mnuchin. John Bolton’s book is published today.
MSCI announces its market classification review for 2020. The Trump administration is considering re-imposing tariffs on aluminum imports from Canada and an announcement could come by the end of the week. If Canada refuses to impose export restrictions on aluminum, the U.S. will announce Friday 10% tariffs by July 1, the day the new U.S.-Mexico-Canada trade deal begins. RealClearPolitics general election polls finds Joe Biden with a commanding lead that’s grown to 9.5 points. Protesters tried tearing down a statue of Andrew Jackson, the seventh president of the United States, in a park near the White House on Monday, scrawling “killer scum” on its pedestal.
TODAY’S HIGHLIGHTS:
U.S. equity-index futures rose after fluctuating earlier in the wake of White House trade adviser Peter Navarro being quoted saying the China trade agreement was over. President Trump reassured investors that the trade deal with China remains in place, and economic data from the euro area pointed to further signs of a recovery that helped gains. 150,000 to 300,000 workers are expected to get back to work this week in New York City. New infections in Florida rose to another high and Texas Governor Greg Abbott said contagion was accelerating at “an unacceptable rate.”
Peter Navarro’s China ‘Walk Back’
EQUITIES: A rebalance of Russell indexes is due on Friday. • There are 184 additions to the Russell 2000 index along with 142 deletions. Information Technology ($7.5bln to buy) has the largest sector inflows.
E-Mini S&P is +0.85% ahead of the market open. SPY is +1% pre-market; Nasdaq +0.7%, RTY +1.4% (IWM 1.7% pre-mkt), Dow future +1%. ES is positive early above 3125 and we are looking for 3176 area in SPX (s/t .786) today.
Economic Calendar
Closing Prices
In the Tradechat Room
MiM
A nice sell built up from the 14:00 candle that by 15:00 could not be ignored and we had about 25 minutes of selling. Our reveal at 15:50 confirmed the sell imbalance and while it did redden that 15:50 5-minute bar it was soon wiped out and the market finished strong on a decent day.
Reminder: June is Russell 2000 reconstitution month. Here is the schedule for that:
- Friday, May 8 – “rank day” – Russell US Index membership eligibility for 2020 reconstitution determined from constituent market capitalization at market close.
- Friday, May 22 – “query period” begins – preliminary shares & free-float information for Russell 3000 Index constituents are published daily & queries welcomes (query period runs through June 12)
- June 5 – preliminary US index add & delete lists posted to the FTSE Russell website after 6 PM US eastern time.
- June 12 & 19 – US index add & delete lists (reflecting any updates) posted to the FTSE Russell website after 6 PM US eastern time.
- June 15 – “lockdown” period begins – US index adds & delete lists are considered final
- June 26 – Russell Reconstitution is final after the close of the US equity markets.
- June 29 – equity markets open with the newly reconstituted Russell US Indexes.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
Chart of the Day
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Our View
Around 7:00 last night the ES traded up to 3125.50 and then Peter Navarro said the trade deal with China was ‘over’ and the S&P futures sold off 65.25 handles down to 3060.00. In a subsequent statement, Navarro said, ‘I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.’ After the backtrack the ES traded all the way back up to 3145.75 earlier this morning. I am not sure why public officials like Navarro say things that are not true but I guess it’s all part of how the Trump administration rolls.
Let’s face it, every drop or pull back, no matter if its 30 handles or 200 handles is being bought. Baring some type of calamity my longer-term view is the ES is going back to 3250-3300. If you take a longer look at the ES chart you see one giant back and fill pattern. The divergences between the US stock index are the wildest in more than a decade and the big surge in big technology stocks has helped push the Nasdaq Composite up 12% YTD while the Dow and S&P are down 8.8% and 3.5% accordingly. The rally in the Nasdaq over the Dow and S&P is the largest since 1983. The gap between the S&P and Dow is the widest since 2002 when the Dow was ahead. Currently, AAPL, Microsoft, Amazon, Google, and FB account for 40% of the Nasdaq and 20% of the S&P.
Our view is to sell the open or the first rally above the gap up and look for the mid-morning low to cover and reverse long. Avoid the middle of the day ‘chop’ and come back and play the MiM at 2:30.
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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