ECB Cuts Back Bond Buying Program Until December

Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 9 out of 11 markets closed lower: Shanghai Comp -0.70%, Hang Seng -0.4.3%, Nikkei +0.50%
• In Europe 12 out of 13 markets are trading lower: CAC +0.23%, DAX -0.22%, FTSE -0.73%
• Fair Value: S&P +4.90, NASDAQ +29.57, Dow +23.01
• Total Volume: 1.25mil ESU & 1,005 SPU traded in the pit

Today’s Economic Calendar:

Today’s economic calendar includes the June Quadruple Witching, Empire State Mfg Survey 8:30 AM ET, Industrial Production 9:15 AM ET, Consumer Sentiment 10:00 AM ET, Baker-Hughes Rig Count 1:00 PM ET, Robert Kaplan Speaks 1:30 PM ET, and Treasury International Capital 4:00 PM ET.

S&P 500 Futures: #ES Up, Down And All Around As NY Attorney General Files Lawsuit Against Trump Foundation

Thursday’s trade started with the Asian markets down across the board and the Stoxx 600 up +0.71% at midday. In the U.S., on Globex, the S&P 500 futures trading range was 2772.25 to 2790.75, with 230.000 contracts traded.

On the 8:30 open the first print in the ES was 2790.00, and then back and filled for the first half hour. An early high was made at 2792.00, followed by an early low at 2786.25, and then a move up to 2794.00. The real meat and potatoes was in the NQ, which dropped 25 points down to 2764.00 at 8:55, and then exploded up to 7310.00 at 9.27.

After a slight pullback this headline hit the tape : “New York AG files lawsuit against Pres Trump, Trump family members, and Donald J. Trump Foundation on accusations of violating New York state charities law” – press – AG Underwood says she aims to dissolve the Trump Foundation, and soon after the ES sold off down to 2781.00 at 10:00. At 10:55, the futures traded back up to 2789.75, and then down to 2784.50 as the NQ pulled back slightly. The next move in the ES was back up to 2791.00 as the NQ shot up to new highs up to 7321.00.

As the afternoon continued, that 2791.00 print ended up being the late high as the ES traded lower, down to 2783.00, just after 2:00 pm. The final hour saw the futures rise back up to 2790 as the MiM was showing moderate buy side on the MOC. The ES printed 2787.75 on the 3:00 pm cash close before settling the day at 2788.75, up +9.75 handles, or +0.35%.

In the end, the Nasdaq is driving everything higher. The PitBull said the whole rally is being driven by 6 to 8 stocks. I am sure FAANG makes up five of the eight. The way I see this is to just continue to buy the weakness. In terms of the ES’s overall tone, as long as the NQ keeps going up, so will the ES. In terms of the days overall trade, volume was a little lower than Wednesday.

NASDAQ’s Best Eight Months Update & Basket of Defensive Stocks

From Stock Traders Almanac:

As of the market’s close yesterday, the slower moving MACD indicator applied to NASDAQ remains positive. NASDAQ’s strong momentum has led to a string of new all-time highs and correlating positions still held in the ETF Portfolio continue to perform. With NASDAQ’s gain today, a one-day decline of over 2.3% (179.36 points) would be needed to turn NASDAQ’s MACD Sell indicator negative.

_{Colors within the report: Green is always the 200 period (day, week, etc.). Red is always 21, Blue = 50, Brown= 100,  Purple is vwap.  *Stars have more emphasis, meaning 2 or more technical pts line up.}

EQUITIES: 

ESU is lower this morning on China tariffs. It has some room before it would test the .786 (potential reversal level) in the September only contract which held exactly on the March high. The rolling front month contract view has .786 at 2803.75.  Initial resistance for today will be 2782/85 area (see chart two).

SPY bumping against its .786 resistance every day this week as momentum stalls, but no real pressure so far.

Dot.com Déjà vu

_{3-Day VIX Chart}

Our View: You have heard me say this many times, but I hate referring to the past as the ‘old days’. Maybe it’s because I don’t feel old, or maybe it’s because what I remember was not that long ago. Maybe people think that 1999-2000 was a long time ago, but when you look at the stock market, I consider a long time ago as the 1929 Wall Street stock market crash or the Kennedy slide of 1962, also known as the ‘Flash Crash of 1962’.

Here is a link to all the crashes… Some go back so far I never heard of them.

Read: https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets

That said, the current run up in the Nasdaq is somewhat of a Déjà vu for me. I remember being on the floor in the S&P pit during the tech bubble, and how the Nasdaq ran up everyday for months, and I also remember how it ended. People were buying up any tech name they could find, and when it was all over most of the companies they bought totally disappeared.

Back then was the day of the ‘day trading stock rooms’, they were a dime a dozen. These traders made millions, and all they knew how to do was buy, buy, buy, but when the Nasdaq turned south they didn’t know how to sell. The tech stocks that started out at $15 or $20 bucks and went up to $200 dropped so fast many of these so called traders froze in their tracks, and the millions they made were lost a lot quicker then they made it. I remember there was a guy that bought the QQQ’s, and he held on to them for over 12 years!

Is what we are seeing today the 2000 tech bubble? No, the market cap of FAANG is probably larger than the entire market cap of the Nasdaq back then. Does that mean there won’t be a correction / crash? No, just look at what happened in February when Facebook revealed it sold personal data to Cambridge Analytica. While the US stock market is clearly in a bull trend again, what happened in February showed just how quickly things can change.

Do I think that’s going to happen again anytime soon? No, I don’t. At least for now higher rates are not scaring investors. It also seems like the markets are pricing in the idea of higher interest rates. There will always be reasons for the markets to sell off. Last year North Korea and the US were heading to a nuclear war, and last week President Trump and the North Korean leader Kim looked like two old friends. As I have always said, the S&P tends to take bad news and make good of it.

Yesterday the Nasdaq 100 futures (NQM18:CME) rallied 7321.25, a new all time high, and all time high close. The NQ has closed higher 7 out of the 10 sessions and yesterday made its its 20th record close this year. The ES is up 9 out of 10 sessions this month, and only 3.1% off it’s all time high. Clearly, the bears are running for the woodshed.

Our view? I could kick myself in the head. After saying ‘just buy the weakness on Wednesday, then watching the ES sell off all day and not saying sell the early rallies. I said sell the early rallies and buy the weakness. The problem… There was no early weakness. The only real selloff came late in the day. I try my best, but sometimes I just don’t get it right.

Today’s call is to be careful. As much as we think higher, the US is going to release its China tariff list, and when they do China is going to retaliate. It’s also the June options expiration, so there should be a lot of two way flow. Our lean is to sell the early rallies and buy weakness, but we also recommend that you play close attention to the headlines.

Market Vitals Technical Analysis for Friday 06-15-2018

[gview file=”https://mrtopstep.com/wp-content/uploads/2018/06/Market-Vitals-18.06.15.pdf”]

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.}