On Friday, the S&P 500 futures (ESZ17:CME) opened the 8:30 am CT regular session at 2459.25, down 5.75 handles, and pushed to an early low of 2456.75 at 9:00 am before rallying up to unchanged on the day at 2465.00 as European markets closed. The ES struggled for momentum in the afternoon while trading sideways to lower, and eventually sold off in the final hour down to 2457.50 and, settling the day at 2461.00, down 4.00 handles, on what amounted to an 8.25 handle range for the. We thought there would be a little more action while the future roll continued, the quad witch expiration passed and Hurricane Irma was due to make landfall, but there wasn’t.
All in all, last week was quiet, even with the expiration, the cleanup in Houston, Irma in the Atlantic, ongoing unrest with North Korea and the seasonal fear that always creeps in post Labor Day. On the September mini contract, after gapping down to open last week in Globex, traded as low as 2445.50, down 28.50 handles on Tuesday, only to rally and push back up within five handles of the prior week’s close. While the bears gapped lower and kept the gap from being filled, bulls once again showed their resilience that even while the technical picture said this market is weak, they stuck to the tireless pattern of buying the dip.
While You Were Sleeping
Overnight, equity markets in Asia and Europe traded higher across the board after tension in North Korea started to die down.
In the U.S., the S&P 500 futures gapped nearly 7 handles higher last night to open at 2467.75. The ESZ continued to grind higher for the rest of the night, eventually making a high of 2475.00 just after 3:30am CT. As of 6:40am CT, the last print in the ESZ is 2472.00, up +11 handles, with 242k contracts traded.
In Asia, 9 out of 11 markets closed higher (Shanghai +0.37%), and in Europe 12 out of 12 markets are trading higher this morning (FTSE +0.45%).
Today’s economic calendar is light, and includes a 4-Week Bill Announcement, a 3-Month Bill Auction, a 6-Month Bill Auction, and a 3-Yr Note Auction.
Our View
The markets shrugged off any ill news last night when the S&P’s gapped open and pushed higher. Today’s economic calendar is virtually non existent, and while the ES is up 11.50 handles, currently at 2472.50, the ESZ is 2.5 handles off the overnight high.
There has been a lot of back and fill over the last month, and it looks like it may be cranking up to push more buy stops back to new all time highs, and eventually 2500. Especially when considering how much bad news out there traders have shrugged off lately, what will be the catalyst for an extended sell off?
Last night’s Globex open was 2467.75, which was near the top of the range last week, we lean toward buying small pullback above that level this morning. Our targets are 2480 and 2488.50. If the futures go all the way down to 2461 to fill the gap from Friday, we feel less optimistic about being buyers today.
Market Vitals for Monday 09-11-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed higher: Shanghai Comp +0.37%, Hang Seng +1.04%, Nikkei +1.41%
- In Europe 12 out of 12 markets are trading higher: CAC +1.09%, DAX +1.05%, FTSE +0.45%
- Fair Value: S&P -2.47, NASDAQ +7.75, Dow -41.21
- Total Volume: 1.2mil ESU & 1.4mil ESZ; 13.1k SPU & 14.5k SPZ traded in the pit
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