There is a lot on the table this week. The November month end, the IMF adding the YUAN to its international currency basket, Global Climate talks in Paris, the ECB meeting, a ton of US economic reports, and the US jobs report on Friday.
To recap yesterday’s trading action, the S&P 500 futures rallied up to 2095.00 during Sunday night’s Globex session, opened at 2090.25 on the 8:30 CT futures open, and then sold off down to 2080.25 at 10:45 CT.
MUTUAL FUND WALK AWAY
It was clear to see by the volumes that not everyone was back from the holidays. While the S&P was moving, the ‘bid / offer’ on the ESZ ladder was showing very low volume. At times there were less than 100 contracts bid or offered. When it’s thin like that it’s very easy to move the futures up and down, and going into 12:20 CT the ESZ15 started to do just that; reversed and started to pop back up, but the futures could not get a larger push up. One factor holding the S&P back was the late day sell off in crude oil futures (CLF16:NYM), as it made a $42.60 high, and traded down to $41.64 late in the day.
After the rally up to the 2088.00 area the ESZ15 sold off down to new daily lows. The MiM (http://closingimbalance.com/) started showing $800mil for sale, with to $-1.3bil for sale on the NYSE close, and then dropped to $2.47bil for sale. The actual MOC came out sell $3.3bil. The futures bounced up to the 2081.50 area and then double bottomed at the 2078.50 level before rallying back up to 2082.50 on the 3:15 futures close.
AFTER HOURS RIP
The ESZ futures settled the cash session at 2082.50, and rallied up to 2085.25 into the Globex close. After the 5:00 CT open, the index futures continued to rally into the first hour of the Tokyo session, trading all the way up to 2092.75 just after 8:00 pm CST.
The ESZ15 started started to rally when the Asian bourses started moving higher. The YMZ15:CBOT rallied 60 points, or +0.30%; the S&P futures (ESZ15:CME) rallied 7.5 points, or +0.70; and the Nasdaq 100 futures (NQZ15:CME) rallied 17 points, or +0.30%, before falling back and rallying again around 5:00 am CT. While the overnight moves were sharp, we think the moves are all tied to this Thursday’s European Central Bank decision, which we think will be bullish along with this Fridays Jobs report. The other part of this bullish scenario is the up coming Dec 15-16 Federal Reserve meeting and the first rate hike in almost 10 years. Then into the December Quadruple Witching and the December quarterly rebalance.
22 DAYS TO 2200.00
In the end trading is all about forecasting and reaction time. As the market moves into the final 22 days of 2015, the markets are going up, but not decisively. All year the markets faced a number of tailwinds, but always recovered. Will we see a repeat of it in 2016? More than likely, but that doesn’t mean the S&P won’t be moving higher… Buy the dips and sell the rips, traders, until it hurts!
Today’s ESZ15 Levels:
| Pivot Point | Support 1 | Support 2 | Support 3 | Resistance 1 | Resistance 2 | Resistance 3 |
| 2084.4333 | 2073.8667 | 2067.9333 | 2057.3667 | 2090.3667 | 2100.9333 | 2106.8667 |
In Asia 11 out of 11 markets closed higher (Shanghai Comp +0.32%), and in Europe 8 out of 12 markets are trading modestly higher (DAX -0.13.%). Today’s economic calendar includes Motor Vehicle Sales, Gallup US ECI, Redbook, PMI Manufacturing Index, ISM Mfg Index, Construction Spending, 4-Week Bill Auction, Charles Evans Speaks, and Lael Brainard Speaks.
ES HAS TO GO DOWN TO GO BACK UP
Our View: The ES sold off a little yesterday. I knew there was a possibility of a “Walk Away’ trade, and after trading higher on Globex the ESZ sold off, then rallied, and closed the session nearly the lows. It was so thin I think the algos had a hard time operating. The first trading day of December, and the shortened week, are filled with economic reports, in addition to all the global news. The problem with December is it starts out with high expectations, weakness mid-month, and then rallies at year end. Am I surprised the ESZ sold off yesterday? Not all all, it’s possible the beginning of the week starts out that way, but we do not think that’s how it will finish. Am I running out of time for my end of the year ES 2200 call? No way.. everything is all systems go. After the fed raises rates in December the ES will already be on its way to 2150. Our view, sell the rallies and buy weakness, the ESZ needs a few days of back and filling.
‘The S&P 500 Futures Take a Hit, and Slow Post Holiday Trade’
As always; please use protective buy and sell stops when trading futures and options.
- In Asia 11 out of 11 markets closed higher : Shanghai Comp. +0.32%, Hang Seng +1.75%%, Nikkei +1.34%
- In Europe 8 out of 12 markets are trading higher : CAC -0.18.%, DAX -0.12%, FTSE +0.30% at 6:00am CT
- Fair Value: S&P -1.81 , NASDAQ -0.71 , Dow -18.02
- Total Volume: 1.37k ESZ and 6k SPZ
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