#ES 2855.50 #Reversal

Index Futures Net Changes and Settlements:

Foreign Markets, Fair Value and Volume:

• In Asia 8 out of 11 markets closed lower: Shanghai Comp -0.31%, Hang Seng -0.92%, Nikkei -1.13%
• In Europe 8 out of 12 markets are trading higher: CAC +0.49%, DAX +0.16%, FTSE +0.14%
• Fair Value: S&P +0.95, NASDAQ +10.84, Dow -15.68
• Total Volume: 1.8mil ESH & 415 SPH traded in the pit

Today’s Economic and Earnings Calendar:

Weekly Bill Settlement, Jobless Claims 8:30 AM ET, Bloomberg Consumer Comfort Index 9:45 AM ET, New Home Sales 10:00 AM ET, Leading Indicators 10:00 AM ET, EIA Natural Gas Report 10:30 AM ET, Kansas City Fed Manufacturing Index 11:00 AM ET, Fed Balance Sheet and Money Supply 4:30 PM ET.

S&P 500 Futures: How High Is High? Let The VIX Answer The Question

It had to happen eventually, and it finally did yesterday. After being up 14 of the first 16 trading sessions in 2018, and up 187.75 handles (+7%), the S&P 500 futures (ESH18:CME) gave way to the downside after U.S. Commerce Secretary Wilbur Ross accused Beijing of ‘employing protectionist actions under the guise of free trade’. While speaking in Davos, Switzerland the U.S. Treasury Secretary Steven Mnuchin followed up saying that the Trump administration supports “bilateral trade agreements,” and that a weaker dollar was good for trade… Down went the S&P.

On yesterday’s 8:30 futures open the ES traded 2848.00, and then traded up to ‘another’ new all-time contract high at 2855.25, up +16.25 handles on the day. While the ES was rallying, the dollar was hitting a three year low, and the VIX was rallying. After the ES made its high, the futures buckled down to 2851.50, and then in came a wave of sell programs pushing it down to 2839.75.

After a small bounce, another wave of sell programs hit, pulling the ES down to 2833.00, 22.50 handles off its high. From there, it bounced up to 2841.50, then in came several more sell programs, taking the ES down to 2829.75, and eventually down to 2825.50, 30 handles of the high of the day. The was a nice short covering rally up to 2838.00, then up to the vwap at 2841.50, and then up to 2845.50, 21 handles off its low.

After 2:00 the ES made four lower lows at 2839.50, 2839.00, 2838.75 and 2838.00 as the MiM went from buy $252 million to buy to $405 million. On the 2:45 cash close the final MiM showed buy $1 billion. On the 3:00 cash close the ES traded 2840.00, and went on to settle at 2841.50, up 3.25 handles, or +0.11%.

In the end the S&P was up, it was down, and it was all around, but at the end of the day, it still finished higher. It was a big day in terms of the overall trade, 1.75 million ES traded, and there was not much damage, other than running a bunch of sell stops.

Keystone Charts – Bitcoin

Bitcoin Real Time Index is mixed currently between two key technical points. Momentum is depressed.

Hourly chart shows the 11700 area (.618 s/t) holding as overnight resistance.

Jan Bitcoin future on CME expires tomorrow and continues to hold below the December significant low.

Feb XBT on CBOT is lower today and has the 12140 area as pivotal resistance.

David Wienke
708-870-5058
www.keystonecharts.net

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While You Were Sleeping

Overnight, equity markets in Asia closed lower, following suit with yesterday’s weakness in U.S. stocks. Meanwhile, in Europe, traders took advantage of Mnuchin’s comments about a weak dollar, and began driving stocks higher.

In the U.S., the E-Mini S&P 500 futures opened last nights Globex session at 2840.00, and initially traded lower, printing the overnight low at 2835.25 in the first half hour. The weakness was short lived though, and a slow, steady move higher ensued. Just after 4:00 AM CT, the ES printed 2845.25, completing another overnight MrTopStep 10 handle rule, and by 6:30 AM had printed a new high at 2850.25.

As of 7:00 AM CT, the last print in the ES is 2847.75, up +6.75 handles, with 144k contracts traded.

Sell Programs And Sell Stops

Our View: Early yesterday, when the VIX was was trading above 11.00 and the ES was on its highs, something had to give. With so many sell stops loading up on the downside, once the ES premium levels started to shrink, the sell programs came flying in and the futures collapsed. The ES was up 15 handles, sold off 30 handles, bounced 21 handles, sold off 8 handles, rallied 7 handles, and then late in the day dropped 7.5 handles. We have just not seen anything like that this year.

Some people think yesterday’s price action was very bearish, and that the ES could start a larger pullback. We don’t think so. What we think is exactly like what we said yesterday; the futures could not keep going up like they have without a pullback. Our view is that in most cases when the ES sells off it usually rallies the next day. Our lean is to buying weakness. Not sure the ES will go there, but 2830.00 should be a key support level.

Market Vitals for Friday 01-25-2018

[gview file=”https://mrtopstep.com/wp-content/uploads/2018/01/Market-Vitals-18.01.25.pdf”]

We have a great webinar coming up this Saturday at 10:00 AM CT

Predictions for 2018

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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. 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.}