If it’s not the low volumes of the S&P 500 futures, then it’s the low volume of the bonds. Or maybe it’s the dollar rising to a 12-year high against the yen, or questions about the Greek debt payments that are coming due. None of it seems to matter, at least not yet, but if there has ever been a warning of “troubled waters” ahead, it’s the extreme volatility in the bonds and notes. Yesterday US Treasuries rallied off of strong auction results pushing the yield on the 10 Yr-note to its lowest level in over three weeks. Crude oil rallied after supply drops.
After opening lower, and selling off after the open, the emini S&P 500 futures (ESM15:CME) back and filled at the 2114-2116 level, and then popped up later in the day as several big futures buy imbalances showed up. The 2:45 cash close showed MOC Sell $200mil. After trading in a low-volume, narrow range, the S&P futures went all the way up to the 2123.00 area into and just after the close. The ES closed down -0.1% while the Dow (YMM15:CBT) and the Nasdaq (NQM15:CME) closed down -0.1% as well. The index markets got off to a weak start over concerns in Greece, and possible interest rate hikes later in the year. It seems to be the same news being churned around, and what it’s doing is laying the groundwork for higher prices in the S&P futures. As I said on the @MrTopStep Twitter account early in the day: the S&P has to go down to go back up, and if the volumes stay low, the buyers will show. That is exactly how the day played out.
There really is nothing new to talk about. I think the markets have already priced in the possibility of a Greek default. I know the Greeks are saying they are going to announce a plan on Sunday but for all practical matters I think the S&P is prepared for the worst; it’s the DAX that will bear the brunt of a Greek problem. Even if Greece does come up with a “plan” it will be no more than a Band-aid for a problem that will never be fully resolved. Looking ahead, the first day of the month and the first trading day of June is Monday, and according to the Stock Trader’s Almanac it’s been up 20 of the last 27. Then we have the May jobs number on Friday. The summer is coming fast traders…
In Asia 9 out of 11 markets closed down, and in Europe 6 out of 12 markets quoted are trading lower this morning. Today’s economic calendar starts with GDP, Corporate Profits, Chicago PMI, Consumer Sentiment. It’s been a long 4 day week. Lets close out the month with some winning trades.
Dow and S&P -0.60% on the Week
Our View: It truly is a pain trade. No one wants to be long so everyone sells it and then everyone gets stopped out when the buy programs squeeze the shorts. I try to tell the PitBull that all the declines do is scare people into thinking the end of the world is coming, and then a few days later the ES is back up on its highs. It is as I say, the same movie played over and over, and I can’t understand how so many people can get fooled so many times.
- In Asia 6 of 11 markets closed lower : Shanghai Comp. -0.18%, Hang Seng -0.11%, Nikkei %
- In Europe 6 out of 12 markets are trading lower : DAX -0.60%, FTSE +0.20%, MICEX +0.96% , GD.AT -0.56% at 5:45 CT
- Fair Value: S&P -2.13 , Nasdaq -1.32 , DOW -14.25
- Total Volume: LOW 1mil ESM and 3k SPM traded
- Economic calendar: GDP, Corporate Profits, Chicago PMI, Consumer Sentiment.
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