S&P 500 Futures: Market Timers Get Bullish? VIX back Under 10; Dow, S&P And Nasdaq All Make New Record Highs

Commentary, News

How many times over the last four or five years have you heard Elliott Wave, Dennis Gartman or Tom DeMark say ‘the high is in’, or ‘get short’ the S&P? It’s not just those three, all of the well known market timers have done it so many times it’s hard to believe that people pay for their services.

At MrTopStep we offer 100% of your money back if you join our forum and decide it’s not for you, but that’s not what the market timers do. If they did, they would be out of business. I know every trader out there wants to see high volatility, larger ranges, and higher volumes, but that may not happen for a long time. The fed has $4 trillion to pay back from all the the quantitative easing they did. and Europe is printing money just like the U.S. did.

While the Chicago Board of Trades fed funds show an 88% chance of a rate hike in December, raising rates at a quickened pace is not going to happen. Historically low interest rates are going to stay low for a long time, and that is why I keep saying that the current rally is going to continue. There is an old saying, and this applies to the Fed, ‘I would rather fight than switch’, and that is exactly where the federal reserve is today.

S&P Makes 45th New High In 2017 On Record Low Volume

At 10:00am Wednesday morning the ES had been held to a 4 handle trading range, 2546.00 to 2550.00. After a little pull back down to 2546.00, the ES went into a slow motion, upside grind. At 11:50 the ES traded up to 2551.00, 6 ticks above Tuesday high, and 5 ticks above Wednesday nights Globex high. There was a total of 419k es traded, 112k came from globex, and the ES is on path for another lowest volume day of the year. After the 2551 high, the ES pulled back to the 2549.50 area, rallied back to 2550.75, and retested 2549.25 before trading up to a new high at 2552.00.

I really can’t believe what’s happening. At 1:25 CT total volume was 512,000 with (like I said above) 112,000 of that coming from Globex, that is 400,000 contracts in five hours of trade. Our sayings about ‘up too high to buy, and too firm to sell’ and ‘thin to win’ are being applied. Like I said on Twitter, the volume is so low the algos can’t eat! I think most of you know I love talking and writing about the markets, but there is so little to say. The ES keeps going up and the volume keeps dropping.

From 2552.00, the ES sold back off and traded 1 tick below the previous low, down to 2549.00, but when the MiM started to show $260 million to buy, the ES ran some buy stops up to a new high at 2552.75. At 2:45 the NYSE net MOC came out buy $480 million, and the ES popped back up and made a new high by 1 tick at 2553.00, pulled back a few ticks and traded 2553.50 just after 3:00, and then settled at 2552.75. Total ES volume was 798,000, one of the lowest full session days of the year.

While You Were Sleeping

Overnight, equity markets in Asia and Europe traded mixed across the board. This seems to the pattern this week. Tight trading ranges all night, and wait for news to come out of the U.S..

In the U.S., the S&P 500 futures opened last night’s globex session at 2552.25, and immediately printed the overnight high of 2552.50. From there, it was a steady grind lower, with the low at 2547.25 being printed just before 6:30am CT. As of 7:20am CT, the last print in the ES is 2549.00, down -4.00 handles, with 97k contracts traded.

In Asia, 7 out of 11 markets closed higher (Shanghai -0.02%), and in Europe 7 out of 12 markets are trading lowder this morning (FTSE +0.33%).

Today’s economic includes Jobless Claims (8:30 a.m. ET); PPI-FD (8:30 a.m. ET); Bloomberg Consumer Comfort Index (9:45 a.m. ET); EIA Natural Gas Report (10:30 a.m. ET), EIA Petroleum Status Report (11:00 a.m. ET); Fedspeak — Jerome Powell Speaks (10:30 a.m. ET) Earnings — JPMorgan (7:00 a.m. ET), Domino’s (7:30 a.m. ET), Citigroup (8:00 a.m. ET).

How High Is High?

Our View: How high is high? Well, the way I see it, the S&P has gone way further than anyone thought it would go, especially when you throw in the lack of selloffs / pullbacks. That said, the S&P is a steamroller that just keeps rolling. Our view is we still see the 2558-2560 area as the next spot to the upside. Market timer Bert Dohmen is talking 2580 to 2600. As long as the volume in the S&P remains so light, you have to buy the pullbacks. I know there is a down day coming, but playing the short side is not where the money trade is right now.

Market Vitals for Thursday 10-12-2017

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As always, please use protective buy and sell stops when trading futures and options.

  • In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.02%, Hang Seng +0.24%, Nikkei +0.35%
  • In Europe 7 out of 12 markets are trading lower: CAC -0.30%, DAX -0.10%, FTSE +0.33%
  • Fair Value: S&P -2.09, NASDAQ +2.88, Dow -54.90
  • Total Volume: 813k ESZ & 417 SPZ traded in the pit
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Danny Riley (2206 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.

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