Yesterday’s trade was another good example of how the rallies don’t hold. As of the close the S&P futures have been down six out of the last eight trading sessions. I think we are all saying the same thing. Yesterday the dollar and gold rallied and the S&P sold off, while the European and Asian markets closed higher.
Time and time again I have stayed away from trying to call the markets higher. I’ve also stated that there’s something holding back the S&P right now. Additionally most technicians are calling for a break back down to the 1980 level. I personally do not think that will happen, and while the mutual funds did not put money to work on the first day of the new quarter, there is no doubt they will be buying back some of the stocks they sold this week and last week. The S&P 500 has been going up for six years and is now starting to stall out. The first quarter of 2015 left the S&P pretty much unchanged on the year, up +0.4%. Not including yesterday’s losses, the Dow Jones (DJIA) could end the first quarter down -0.3% with the Nasdaq Comp. up 3.5%. Nymex crude oil closed out the first quarter down 11%.
The first quarter was filled with some wild price swings, but most of the time the S&P remained close to being unchanged on the year, up 1 or 2%, or down 1 or 2%. So far the markets have avoided any major downside in the face of a large drop in oil and the dollar and the threat of an interest rate hike by the Federal Reserve sometime this year.
On Globex this morning the S&P sold off down to a low of 2044.00 and is trading 2046.60, down 5.5 handles. The mutual funds didn’t show up on the buy side on yesterday’s close, but something tells me today could be the day. Remember, the CME group is closed Friday for Good Friday, Easter and Passover. It’s my thought process that many traders will back away from the screens today and make for a four-day weekend. This could create one of MrTopStep’s trading rules called “thin to win.” In that case, a small number of aggressive bulls will be able to push prices higher with low volume and little resistance.
We hope everyone has a great holiday weekend and we hope to see you next week. Trade well …
In Asia 8 out of 10 markets closed higher and at 5:00 am CT; in Europe 9 of 12 markets are trading higher this morning. Today’s eco calendar starts with the Challenger Job-Cut Report, International Trade, Jobless Claims, Gallup US Payroll to Population, Federal Reserve Chair Janet Yellen opening remarks at St Louis Fed community development conference, in Washington, Federal Reserve Gov. Lael Brainard speech on economic mobility at St Louis Fed community development conference in Washington, Factory Orders, EIA Natural Gas Report, 3-Yr Note, 10-Yr Note and 30-Yr Bond Announcements, Fed Balance Sheet and Money Supply.
Our view: The ESM15 has been down 6 of the last 8 sessions. It just can’t seem to shake off the current weakness and selling. This morning we have another heavy round of economic reports to get past. Yesterday the dollar sold off and gold and crude oil rallied. I keep thinking the mutual funds are going to come to the rescue, but so far they have not started buying back the stocks they sold over the last 8 trading days. In fact, it has been 8 straight days of sell imbalances. Our view is that as more people cut out for the weekend, the S&P will short cover. We lean to buying weakness with tight stops.
“Mutual Funds to the Rescue”
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 10 markets closed higher: Shanghai Comp +0.41%, Hang Seng +0.77%, Nikkei +1.46%
- In Europe 9 of 12 markets are trading higher: DAX -0.05%, FTSE +0.08%, MICEX +0.38%, Athens GD.AT -1.60% (at 5:00 am CT)
- Fair value: S&P -7.86, Nasdaq -8.34, Dow -88.78
- Total volume: 1.8mil ESM and 9.1k SPH traded
- Economic schedule: Challenger Job-Cut Report, International Trade, Jobless Claims, Gallup US Payroll to Population, Federal Reserve Chair Janet Yellen opening remarks at St Louis Fed community development conference, in Washington, Federal Reserve Gov. Lael Brainard speech on economic mobility at St Louis Fed community development conference in Washington, Factory Orders, EIA Natural Gas Report, 3-Yr Note, 10-Yr Note and 30-Yr Bond Announcements, Fed Balance Sheet and Money Supply.
[s_static_display]
No responses yet