It’s Been An Amazing Rally But Is The Public On Board?
Not according to EPFR Global who says retail investors have pulled $1 trillion from mutual funds that target U.S. stocks since the start of 2012. During that period the S&P has rallied 116%, and the Dow and Nasdaq Composite have made a combined 190 new all-time highs. Many people that owned mutual funds during the credit crisis had gotten back a big chunk of the money they lost by 2012, but few thought the markets would go as far as they have. According to the Leuthold Group, the S&P 500’s 0.4% rise yesterday put the broader index over the top for its own milestone, making it the greatest bull market run in the post-War era. The S&P has notched a more than 300% gain since the bull market began in March 2009, surpassing the tech-fueled-rally of the 1990’s.
Record Setting Pace
Thursdays trade started out with oil hitting a three year high amid continued protests in Iran. The Asian markets closed higher higher, with Japan’s Nikkei hitting a fresh 26 year high, and seeing its biggest one day gain in more than a year after being closed for the last three days. In Europe, the FTSE took off, and the Stoxx 600 was up 0.60%. On Globex the S&P 500 futures were up 0.40% after the U.S. ADP reported 250,000 new jobs.
After solid gains in 2017, the U.S. indices are off to a big start in 2018. While there are lagging expectation about the longevity of stocks this year, we are not here to fight city hall, and as the old trading adage goes, never forget… The trend if your friend.
On Thursday’s 8:30 CT futures open the S&P 500 futures (ESH18:CME) traded 2719.25, up +8.25 handles, and immediately shot up to 2722.75. It’s been one continuous buy program so far in 2018, and clearly the mutual funds are buying back part of the tech stocks they sold in the final month and a half of 2017. After a small down tick, the ES got hit by another buy program pushing the futures up to a new high at 2726.00, and then up to 2729.00, up 19.75 handle, or +0.71%, at 9:45 CT. From Friday’s 2668.00 low to yesterday’s 2729 high, the ES has rallied 61 handles in 3 trading days, and up 30 handles from Wednesdays low.
The next move was all the way back down to the vwap at 2721.50, and then a bounce back up to 2726.50. After a little ‘back and fill’, the ES traded up to 2728.00 just before 2:00 when the MiM started to show $595 million to sell, and the ES pulled back down to 2725.00. The ES then sold off down to 2722.25 just after the 3:00 cash close and settled at 2724.00, up +14.75 handes, or +0.54%, on the 3:15 futures close.
In the end the S&P 500 futures (ESH18:CME) settled at 2723.75, up +12.75 handles, or +0.46%; the Dow Jones futures (YMH18:CBT) settled at 25,053, up +175 points, or +0.69%; the Nasdaq 100 futures (NQH18:CME) settled at 6603.50, up +19.00 points, or +0.28%; and the Russell 2000 (RTYH18:CME) settled at 1557.00, up +1.50 points or +0.09% on the day.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.20%, Hang Seng +0.25%, Nikkei +0.89%
- In Europe 12 out of 12 markets are trading higher: CAC +0.76%, DAX +1.02%, FTSE +0.31%
- Fair Value: S&P -2.02, NASDAQ +11.15, Dow -28.03
- Total Volume: 1.1mil ESH & 530 SPH traded in the pit
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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.
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