(Photo Credit: Provided)
There are a lot of things that can affect the direction of the markets and yesterday it was the downing of a Russian SU-24 over Turkish airspace. With elevated terror alerts being posted around the globe, the S&P 500 futures (ESZ15:CME) opened down 11.75 points initially, rallied all the way up to an early high of 2078.50, and then sold off down to 2067.00 before recovering all the way back up to the 2091.00 level. Just after a Reuters headline reported ‘HOSTAGE SITUATION IN NORTHERN FRENCH TOWN OF ROUBAIX NEAR BELGIUM, SEVERAL WITH GUNSHOT WOUNDS’, the S&P futures fell back to the 2084.00 level. Things are starting to build up in the Middle East and now it’s spreading around the globe.
Event Driven Lows
Despite the warnings, and the new hostage situation, the S&P again made good out of bad news. The early and mid-afternoon price action was another good example of the overall price action, let the sellers sell into the decline, level off, and then ‘bids’ come flying back in. This price action has been a hallmark of how the ESZ15 has been working over the last several months. Additionally, the event driven lows have set a base for several higher lows; August 24th 1831 low, September 29th 1861 retest, the recent 1998.50 low from early last week and yesterday’s 2065.50 low when the Turkey downed a Russian warplane near its border.
We are going to keep it light today. Asia was down and Europe is trading higher. There are a lot of buy stops that go from 2089 to 2096, and again above 2099 all the way up to 2112, and then up to 2124. I do not expect that to happen today, but I do think there is a good chance we see the ESZ above 2112 early next week. After that we will be gearing up for the Santa Clause rally and its +1.5% gain..
In Asia 8 out of 11 markets closed lower (Hang Seng -0.40%), and in Europe 8 out of 12 markets are trading higher (DAX +1.44%). Today’s economic calendar includes the Bank Reserve Settlement, MBA Mortgage Applications, Durable Goods Orders, Jobless Claims, Personal Income and Outlays, FHFA House Price Index, PMI Services, Flash Bloomberg Consumer Comfort Index, New Home Sales, Consumer Sentiment, EIA Petroleum Status Report, 3-Month Bill Announcement, 6-Month Bill Announcement, 7-Yr Note Auction, and the EIA Natural Gas Report.
T+3 and the Holidays
Our View: We have another day of heavy economic releases this morning. The CME is closed tomorrow for the Thanksgiving holiday and reopens for a half a day on Friday. The currencies, bonds, and commodities close at 12:00 CT, and the S&P, Nasdaq and Dow futures close at 12:15. I think the downing of the Russian jet has helped set up the Thanksgiving low. I also think the S&P will be trading at new all time highs next week, and I am sticking with my ES 2200.00 call for year end. Our view is to start buying weakness. All the little sell offs are doing is adding buy stops above the market. The stats show today and Friday as being bullish, and with the terrorist threats and holiday upon us, we think ‘think to win’ may play out in the spoos over the next few days.
As always; please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed lower : Shanghai Comp. +0.88%, Hang Seng -0.40%, Nikkei -0.39%
- In Europe 8 out of 12 markets are trading higher : CAC +1.38%, DAX +1.41%, FTSE +0.85% at 6:00am CT
- Fair Value: S&P -2.65, NASDAQ -1.49, Dow -35.36
- Total Volume: 1.55mil ESZ and 3.1k SPZ
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