Premium OP: Where Has All the Volume Gone?

Market Review

Globex

S&P 500 Futures:

Despite having its biggest tw- week rally since the 1930s the Dow still ended the week down 2%. Over the last several days the S&P futures have been in a trading range with neither the BULLs nor BEARS winning. On days the markets open down they generally make a mid-morning low and rally, pull back and rally on the close. When the ES opens high it’s either a sale on the open or the first rally about the gap up, sell-off,  make a mid-morning low and rally and then stage a late-day pull back then rally on the close. Above has been the overall price action for the last two-plus weeks. How long will it last? I’ll tell you…. As long as the government is passing spending bills. While that’s working now I don’t think it will last!

The ES traded 2805.00 on yesterday’s 8:30 CT futures open. The ES rallied up to an early high at  2811 at 8:30:25, sold off down to 2785.00 at 8:39 and rallied up to a lower high of 2801.25 at 9:40 am CT. The ES pulled back to a lower low at 2782.25 at 10:12, back and filled for a bit then traded 2803 at 11:40, sold off down to the 2795 area and then made a sequence of highs of 2817.50 at 1:17, 2823 at 1:51.

 At 2:00 CT, the ES traded 2820, traded 2826 at 2:30 and traded 2833 as the 2:50 cash imbalance showed $1.4 billion to buy. On the 3:00 cash close, the #ES traded 2826.75 and settled at 2829.50, up 48.75 handles or +1.7% on the day. 

In terms of the ES’s overall tone, as the top part of the OP says, the ES was weak early in the week and firm later in the week. In terms of the day’s overall trade, all I have to say is WHERE HAS ALL THE VOLUME GONE?  A total of 1.28 million ES futures traded with 290,000 coming from Globax making total day volume ONLY 990,000, by far the lowest daily volume since the COVID19 crisis began. 

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MiM

Why did we sell when the MIM was so strong?  

Check out that symbol# percentage number.  Since the floor closing in April our MiM data feed contains Nasdaq symbols for the UTP tape.  Amzn and Apple were large buys on the reveal and shot that top-line number up, but the symbols were only 54% to the buy-side, a much more neutral reading.  Overall the MOC with only NYSE symbols was around 100M to buy, after an afternoon rise that was disappointing and we sold off only to climb most of the way back. 

Questions?  Please email me: Marlin@mrtopstep.com

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Our View

Trade It As You See It

Don’t know if the S&P is going up or down? Well, this is a confusing time. As Americans it’s our nature to believe things will get better like they always have. Deep down I believe it will but I just can’t say that right now. I know everyone freaks when they see the news and US coronavirus cases nearing a million and over 50,000 deaths. I think we are all of the same mindset… how did this happen? Who is at fault? Maybe the virus didn’t come from a Chinese lab, maybe it came from wild animals from Chinese wet markets. I honestly don’t know but what I do know is there is no way almost 1 million people get sick in the US without China knowing this long before they went public. This virus has been in the US since last year. 

I know this is a touchy subject, some people just hate Trump’s guts but I am not sure anyone could have stopped the virus. We can all point fingers but I am not sure that’s going to do anything. Yesterday I had a ‘social distancing’ cookout with a pharmacist and I asked her several questions and one was ‘do you think COVID19 was breaking out in the last quarter of 2019 and she said ‘there were a lot of people that were sick and not getting better with traditional’ drugs”. She went on to say that some of those same people got sick again. Her husband was admitted into the hospital at the end of December for the flu that lasted over a month and again none of the drugs that are traditionally given worked. She said several things didn’t make sense until after China came clean and seeing what’s going on she felt confident the virus had already spread by the time we fully knew about it. I also have a family member whose wife got it and gave it to the family and the only symptom he had was the loss of taste, his two girls were fine and his wife was down for two weeks. All they took was a ZPAC and Tylenol.  I will say one thing, some state governments like Florida had very slow reaction times that didn’t help but again I am not sure anyone could have contained it unless you knew it early on. I hate to say it but I don’t think there is anything we can do, everyone will get the virus eventually.

My down Friday didn’t work so I am pulling back from a two-week decline. The ES is still in its range but it’s weathering the storm and the extremely low volume is helping that cause. The drops are being bought. Our lean, I think today is an up day but that will not preclude me from selling a 20 to 30 handle higher open and buying the 10:30 -11:00 ET low. What I am concerned about is with the big-name tech stocks up so much like FANG and all the tech earnings Tuesday through Thursday that there very well could be some selling tied to it. Right now I think you trade it as you see it!

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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_{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.}