S&P 500 Futures and the August Expiration

August Expiration Stats: https://mrtopstep.com/wp-content/uploads/2015/08/august-expiration-stats.png

If you have not noticed, the S&P has been going down, but going up during the expirations. It’s all about following patterns, and as bad say the stock market may look, I still do not think a major stock market decline is coming anytime soon. As investors move away from the US stocks to Europe and Asia, the S&P may not be going up right now, but it’s not going down that much either.

In addition to all the negatives surrounding the US stock market, the S&P 500 is only up or down 1%, basically unchanged on the year. The VIX traded down to 12.27 yesterday so my question to you is, where has all the ‘fear’ gone? Like all the 7 consecutive down days in the the DOW, the worst downside streak since 2011, what happened? What happened is like all the other sell offs, the markets go down, everyone gets short, and in comes the capitulation.

Patterns Matter

Because the algorithmic and HFT programs are designed to ‘jump’ in front of our orders, traders need to acquire new trading tools, and the one that can help traders the most is recognizing the patterns that show up. The one we are talking about today is how the S&P ‘tends’ to get past the expiration and sell off at month end. The other pattern we will be looking for is the PitBulls Thursday / Friday low the week before the August expiration. I think we all know that nothing works all the time but paying attention to certain patterns can be a very useful trading tool.

As you can see by the August S&P cash study above, the Friday before the expiration is weak, up 14 / down 17 of the last 31 occasions, and then next Mondays stats how the S&P up 22 / down 9 of the last 31 occasions. A wider look at the week shows an up July expiration.

In Asia, 11 out of 11 markets quoted closed lower (Shanghai Comp. -0.01%), and in Europe 9 out of 12 markets are trading lower this morning. Today’s economic schedule starts with the NFIB Small Business Optimism Index, Productivity and Cost, Redbook, Wholesale Trade, a 3 Yr-Note auction and earnings from JASO, RRGB, TW, CREE, CSC, FOSL, TPUB, SYMC, ZBRA, ACM, ARCO, FOGO, AER, MYGN, PRTS, and HMIN.

WEAK DATA PUSHES CHINA TO DEVALUE YUAN CAUSING LARGEST ONE-DAY LOSS IN TWO DECADES

Our View: The bears were getting feisty with me on Twitter yesterday. I want to be clear, at this stage I don’t really care what the S&P does. If it breaks, great, if not I am sticking to what I have been saying for months; the S&P is not going up or down sharply anytime soon. The ES is in a trading range! Can that change? Sure it can, but not now. Yesterday the ESU closed at 2099.80, a great close, and when the Chinese devalued the YUAN it sold off down to 2085.50, then rallied back up to 2092.25 around 6:15 am, and then headed back down to new Globex lows at 2083.25, just after 7:20. Our view is to buy the early weakness and sell rallies, it’s going to be a very long day.

MrTopStep Mid-Day Update with Danny Riley

As always, please use protective buy and sell stops when trading futures and options.

In Asia 11 out of 11 markets closed lower : Shanghai Comp. -0.01%, Hang Seng -0.09%, Nikkei -0.42%
• In Europe 9 out of 12 markets are trading lower : CAC -1.38%, DAX -1.87%, FTSE -0.96%, MICEX +-.72%, at 5:30 am CT
• Fair Value: S&P -4.70., NASDAQ -4.85. , Dow -52.94.
• Total Volume: 1.19mil ESU and 4.2k SPU traded
• Economic calendar: NFIB Small Business Optimism Index, Productivity and Cost, Redbook, Wholesale Trade and a 3 yr Note auction.

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