I started today’s Opening Print earlier than I generally do. Most of the time I start adding things before the S&P futures close. But I’m still writing it at 9 o’clock at night and then updating it at five in the morning.
Over the last several weeks the S&P 500 futures has found itself in a funk. There are several reasons for this. First is the weak outlook by analysts for the first-quarter earnings. The second part could be due to a slowdown in some economic indicators, and the third and maybe the most important part is Europe’s new bond buying program. The fourth and final problem for the S&P is the Fed continues to talk higher rates. All of this seems to be clogging up the pipe. When you combine the four you get what you’re seeing currently in the S&P — a very, very slow grind. People are weary of the overall price action, and the drop in volume is pointing to less individual trading.
I went into the MrTopStep trading room yesterday and explained that all these attempts to take out the June e-mini futures 2109.75 contract high have done is increase the level of buy stops just below and just above the contract high. I also said :
09:21:27 TRADINGDATA2: (driley) big pre open RIP
09:25:38 TRADINGDATA2: (driley) The buy stops in the ESM are “building” up. There is little doubt they run the stops , its just when they run the stops
11:10:31 TRADINGDATA2: (driley) It looks like the current patterns are sell off in the am / level off and rally but the big thing out of all this is how the ES is never too far from S&P 2100 and the continued build of all the buy stops above 2100 , 2106, 2109 -2110 and all the way up to 2118
03:08:54 TRADINGDATA2: (driley) the robots know when its best to run buy and sell stops but eventually it just becomes too hard to stop, a kind of forgone conclusion
03:10:02 TRADINGDATA2: (driley) when you revisit a price or an area so many times it increases the chance of blowing thru the level.
Sometimes traders need to hear it live. They have a good idea of what they see and think but once the move starts they question it. Let’s face it, fellow traders, it’s not up to us when and if the S&P takes out the stops above the highs, it’s up to the same “spoofing” accounts that caused our desk to lose $5.3mil during the Flash Crash. It’s 8:30 pm CT and the ESM is trading 2099.00, just 10.75 points off its contract high. Just one buy program away… you tell me when they take out the highs and all the buy stops!
Earnings Deluge
In Asia 6 out of 11 markets closed higher, and in Europe 9 out of 12 markets are trading lower this morning. Today’s economic and earnings calendar includes jobless claims, PMI Manufacturing Index flash, new home sales, EIA natural gas report, 2-, 5- and 7-year note announcements, 7-year TIPS auction, Fed balance sheet and money supply, and earnings before the open from: MMM ABBV ALXN ALK MO AMAG BEAV BAX CAB CAMCOG CSL CAT DPZ DOW DPS DST DNKN EW LLY EQM FAF FCXGMT HSY HMC IBN IR JNS JCI MJN MDSO MHO MTH NDAQ NVS NUEPENN PEP PNK PJC PII PG PRLB PHM DGX RTN COL RCL SNA LUV SWK UAL UNP GRA WBC WAB WHR and after the close from: ALGN ALTR AMZN BLDR ELY CBI CB CYN DGII ETFC EFII FSL GIMO GOOGL GHL AWAY HBI JNPR KLAC LVS MSCC MSFT MTX N NEM OLN P QLIK RMD SBAC SBUX SYNA TRN and VRSN.
Same Prices Over and Over
Our view: What’s scary about this is how quickly the ES can reverse to the downside and just stop and go right back up, all on no volume. Like I have said, I have been part of every major stock market event since 1985 and I do not think I have seen anything like what’s going on now. Honestly, I’m getting tired of looking at the same prices over and over. Europe and the DAX are down again this morning. Our view is to sell the early rallies and buy weakness. We still think up, we just don’t know when. Out of the last 10 Thursdays, 6 have closed higher and 4 closed lower. Friday is 5 up / 5 down of the last 10 occasions.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed higher: Shanghai Comp. +0.36%, Hang Seng -0.38%, Nikkei +0.27%
- In Europe 9 of 12 markets are trading lower: DAX -1.13%, FTSE +0.12%, MICEX -2.22%, GD.AT +0.48% (at 6:00 am CT)
- Fair value: S&P -6.40 , Nasdaq -7.92 , DOW -76.08
- Total volume: LOW 1.18mil ESM and 3.9k SPM traded
- Economic Schedule: Jobless claims, PMI Manufacturing Index flash, new home sales, EIA natural gas report, 2-, 5- and 7-year note announcements, 7-year TIPS auction, Fed balance sheet and money supply.
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