The Asian markets closed mostly lower and Europe is trading mixed but slightly higher. The next two days will bring 18 separate economic numbers. From the ADP number to the FOMC announcement to farm prices it’s going to be a hella blue.
There was talk on the trading floor that the weakness in the metals and commodity markets is due to the $410 million settlement that JPMorgan agreed to pay in connection to allegations of energy market manipulation in the Midwest and in California. The firm has decided to shut down its commodity desk and many think the weakness is coming from the firm liquidating commodity futures and options positions.
Other than that the S&P saw another very slow day. Futures volume was under 1.3 million and total CME S&P option volume was 6,000 contracts. As we said Monday, the Fed will have the most sway over the direction of the markets this week.
One of the hardest jobs a trader can have is being a market timer. Big names from Bob Prechter to Bert Dohmen have had a very lonely job calling out when the actual apocalypse will start. If you had sold every time Prechter sold over the last 5 or 6 trades and didn’t cover fast, you might not have made it to the later trades because you got blown out on the first one or two. Their desire to be the first to call the meltdown has cost a lot of folks a lot of money with all their false starts.
Our view is that right now the S&P isn’t going up or down. Both Monday and Tuesday saw one of MrTopStep’s key rules, the 10-Handle Rule. Both days have seen 10-handle day ranges. Expect more of the same.
That said, with yesterday’s $1.2 billion for sale and today’s stats showing the Dow has been down on the last trading day of July 10 out of the last 15 years, not to mention a good possibility of more Fed taper talk, one would have to expect lower prices.
But this goes right back to a nagging little question that no analyst or market timer has been able to answer: Why hasn’t the S&P sold off already?
- It’s 7:15 a.m. and the ESU is trading 1679.75, down 2.75 handles; crude is down 1.45 at 103.10; and the euro is down 6 pips at 1.3262.
- In Asia, eight of 11 markets closed lower: Shanghai Comp. up 0.19%, Hang Seng down 0.32%, Nikkei down 1.45%.
- In Europe, eight of 12 markets are trading lower: DAX down 0.56%, FTSE down 0.63%.
- Today’s headline: Stock futures flat after ADP report above estimates (Reuters)
- Total volume: 1.3mil ESU and 3.9k SPU traded
- Economic calendar: MBA mortgage applications, ADP employment report, GDP, employment cost index, Chicago PMI, oil inventories, FOMC meeting announcement, farm prices and earnings from Comcast, Honda, MasterCard, Hess, Humana, Sodastream, Allstate, CBS, Marriott, MetLife, Whole Foods, Dreamworks Animation and Yelp
- Fair value: S&P +3.04, NASDAQ +7.17
- MrTopStep Closing Print Video: http://mrtopstep.com/2013/07/mrtopstep-closing-print-07-30-2013/