All of the CME Group’s equity futures traded in narrow, low-volume trading ranges yesterday. After a small gap higher off the 8:30 CT open, the Emini S&P 500 futures (ESH15:CME) sold off down to 2093.25 and then slowly traded back up to the 2101.00 area. Despite a heavy economic schedule and Mario Draghi speaking, the overall trade was somewhat muted.

At the end of the day the S&P closed 3.25 points higher or +0.1%. The Nasdaq futures (NQH15:CME) closed up 0.3% at 4449.50 while the Dow futures (YMH15:CBT) closed up 34 points or +0.2%. The S&P futures had closed lower for four days straight before yesterday’s slight bump.

Most of the floor traders we spoke to said they thought today’s slowdown was tied to Friday’s jobs report. Despite the weakness, the S&P remains close to its all-time high of 2117.75 set back on Feb. 25. Trading activity and volume have dropped off considerably over the last 5 weeks. Yesterday saw the second lowest volume of the year, only 5.8 billion shares traded. Traders may blame today’s jobs report for yesterday’s slowdown, but that doesn’t explain the last two weeks.

To put things in perspective, the E-mini S&P used to do 2.5 to 3 million contracts a day a few years ago. Over the last year and a half that volume has dropped to 850,000 to 1.1 mil contracts a day. During the January selloff the ES was doing 1.8mil to 2.1mil on good days. While no one really says much about it, it’s really quite shocking considering the all-time volume high for the-mini S&P is 6.69mil contracts in one day during the credit crisis of 2009.

So, where has all the volume gone? Is it really because the markets are up so much, or has the public lost some of its appetite for trading? Have a lot of people disappeared into dark pools? My feeling is the stock, futures and options traders are rare birds, that there are just not as many people trading as there used to be.

The Asian markets closed mostly higher and in Europe 8 of 11 markets are trading higher this morning. Today’s economic calendar: jobs Friday, international trade and consumer credit.

ES down 6 of the last 9 Fridays

Our view: Fridays have not been kind to the S&P, and initially I do not think that will change. It’s been a long two weeks of quiet trade. Obviously, traders have cut back and I am not exactly sure why. While the US stock market has been somewhat stuck over the last several weeks, the European markets continue to extend higher, and most are now sitting at their highest levels since 2007. This morning traders will be focused on the US jobs report that is expected to see payrolls to increase by 235,000 in February, a slower pace than the month before.

A few weeks ago when the VIX fell and volumes dropped we didn’t think the slowdown would last. Then, despite the kind of small selloff that is usually followed by a volume surge, the volume did not increase. Yesterday the ESH15 only did 1 million contracts including pre-market Globex volumes. Let’s face it, folks – the S&P is too firm to sell and just up too much to buy and investors know it.

Our view is for some type of countertrend trade with a possible late Friday rip. If the jobs number comes in higher than expected and the ESH15 is up sharply on oversized volume, we want to sell that rally and then look to buy weakness later.

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

• In Asia 6 out of 9 markets closed higher: Shanghai Comp -0.22%, Hang Seng -0.12%, Nikkei +1.17%
• At 5:30 am CT in Europe 8 of 11 markets are trading higher: DAX +0.06%, FTSE -0.16%, MICEX -0.81%, Athens GD.AT +0.53%
• Fair value: S&P -1.26, Nasdaq -0.68 , Dow -13.59
• Total volume: LOW 1mil ESH and 5.3k SPH traded
• Economic schedule: Jobs Friday, International Trade and Consumer Credit
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