Low volumes and the algorithmic programs finally did away with the buy stops sitting just below and just above the old contract high. Yesterday the S&P 500 futures (ESM15:CME) decided to “officially” run the buy stops above 2100.00 and its old March contract high at 2109.75. As I have said many times: When the S&P continues to sell off and retest a big figure like 2100 it becomes just a matter of time until the futures blow through the level. Yesterday was that day.

I believe that the S&P futures had been “back and filling,” and based on the overall low volumes of the CME Group’s indices it was just a matter of time until the S&P took out the stops and the contract high.

Sell in May and Walk Away

I still maintain that the futures are not going to explode higher or sell off hard anytime soon, but I want to remind everyone that the best 6 months for stocks (November to April) is coming to a close and that the old adage about “Sell in May and Walk Away” is not far off. I have said it many times: I am bullish but I am not foolish, and while we have been selling the S&P firm up I still think most of this year’s gains will come in the final quarter of the year. Can the S&P futures go up to 2120 or 2130? I think it could but I also think you have to look at the net changes over the last 16 sessions. In the last 16 sessions the ESM15 has closed higher 11 times, down 3 and 2 unchanged. In the last 8 sessions the ESM15 has been up 6 / down 1 and 1 unchanged.

In Asia 6 out of 11 markets closed higher, and in Europe 11 out of 12 markets are trading higher this morning. Today’s economic and earnings calendar includes the durable goods orders and earnings before the open from: CBOE, CVX, CLX, CVS, LPNT, MCO, VFC, and WETF.

S&P Futures Up 6 of the Last 8 Sessions

Our view: It was just a matter of time that the ESM blew through the highs. After so many attempts, all the failures did was add more buy stops above the market, and as the stops continued to build the algos started loading up. At least 2 times yesterday before the ESM15 took off it hesitated at a price, printed big volume and then took off into the buy stops. I am going to take a step back today. I think we continue to go up but I also think it will be a two-way trade.

Tomorrow fellow floor trader Robert Hefferman will be heading up the MrTopStep Saturday morning webinar. I am going to do the intro and Robert and I will be discussing the July futures pit closures. Then we will be digging into the May 6, 2010, Flash Crash. I assure you this is going to be a very interesting discussion. So … please sign up now. It starts at 10:00 CT.

SIGN UP NOW!

https://mrtopstep.omnovia.com/register/77691429463308

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. -0.47%, Hang Seng +0.84%, Nikkei %
• In Europe 11 of 12 markets are trading higher: DAX +0.75%, FTSE +0.49%, MICEX +1.05%, GD.AT +4.27% (at 6:00 am CT)
• Fair value: S&P -6.77, Nasdaq -8.64, Dow -79.39
• Total volume: 1.36mil ESM and 6.6k SPM traded
• Economic schedule: Durable goods

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