Are the S&P 500 futures going higher? Are crude oil futures going higher? Only the algos know for sure. What we retail traders know is that there is a lot of news out there, some good, and some bad, but at the end of the day, it doesn’t seem to matter. Like I said yesterday, the markets go up, and the markets go down, and maybe it’s all part of the same cycle; dip and then rip.
Oil drops to 10-month low; largest first-half slide in 20 years – CLQ down another -2.34%
Yesterday, at 9:45 CT, the S&P 500 futures (ESU17:CME) rallied up to 2488.50 on Globex, opened at 2437.00, traded sideways between 2434.50 to 2437.25 for almost an hour, and then popped up to 2440.00. Crude oil futures (CLQ17:NYMEX) ran buy stops up to 44.20, and as quickly as it popped, it sold back off to 43.54.
I am not going to do all the ups and downs of the ES and CL today. I’ll just tell you that after the pop up to the 2440 level, the ES got hit by 4 sell programs that pulled the futures down to 2430.50, which filled the gap, and then bounced back up to 2436.00. The ES trade has been choppy. At 11:10 CT the crude oil futures had sold off over $1.00 from its high, and printed a new daily low at 43.12.
An earlier headline said “OPEC mulls deeper output cuts: *Iran oil minister.” Not long after that, this headline hit the tape: “THREE #OPEC DELEGATES DISMISS IDEA OF DEEPER PRODUCTION CUTS REFERENCED BY #IRAN’S ZANGANEH: RTRS.” After that, the rally up to 2436 failed, and by 1:00 the ES had traded all the way down to 2428.00, and the CLQ dropped down to 42.05.
While it was somewhat of a slow day, there were some decent moves. After the two futures popped, things slowed down. At 2:30, the MiM showed $288 million to BUY, and the ES started to sell off again. The ES dropped down to the 2430.50 area, and popped back up when the 2:45 cash imbalance showed a net BUY of $744 million.
In the end, it was a long day of back and forth for the index futures markets. The S&P 500 futures (ESU17:CME) settled at 2433.25, down 4.25 handles, or -0.17%, the Dow Jones futures (YMU17:CBT) settled at 21373.00, down 64 points, or -0.30%, and the Nasdaq 100 futures (NQU17:CME) settled at 5794.25, up 61.50 points, or +1.07%.
Dow Theory
While there has been an abundance of negatives being thrown around about a stock market sell off, Raymond James chief investment strategist Jeffrey Saut has a different view. #DowTheory
This is a good read: https://www.raymondjames.com/wealth-management/market-commentary-and-insights/investment-strategy
While You Were Sleeping
Overnight, equity markets in Asia traded mostly higher, and were led by the ASX 200, which closed up +0.71%. Meanwhile, in Europe, most majors are trading lower this morning, with the Lisbon PSI 20 index leading the way down at -0.66%. In the U.S., the S&P 500 futures opened the globex session at 2431.75 and began trading lower, finding an early low of 2429.25 at 5:30pm CT. From there, the futures traded sideways until Asian markets opened, and the ES caught a bid, trading up to 2434.50 at 1:00am, which so far has held as the overnight high.
After the European open, the ES pulled back from the highs and traded down to a new low of 2428.00 at 4:30am, extending the overnight trading range to 6.5 handles. Since then, the futures have recovered, and are currently trading near the highs again. As of 6:30am CT, the last print in the ESU is 2432.50, down -1.00 handle, with 117k contracts traded.
In Asia, 7 out of 11 markets closed higher (Shanghai -0.29%), and in Europe 10 out of 12 markets are trading lower this morning (FTSE -0.34%). Today’s economic calendar includes the Weekly Bill Settlement, the 52-Week Bill Settlement, Jobless Claims, FHFA House Price Index, Bloomberg Consumer Comfort Index, Jerome Powell Speaks, Leading Indicators, EIA Natural Gas Report, Kansas City Fed Manufacturing Index, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 2-Yr FRN Note Announcement, a 2-Yr Note Announcement, a 5-Yr Note Announcement, a 7-Yr Note Announcement, a 30-Yr TIPS Auction, a Fed Balance Sheet, and Money Supply.
Our View
They say if enough people wish the markets lower they will oblige, but the question right now is, what has changed? Currently the S&P is 24 handles off its record high, and as I said on Monday, when the markets push into new highs after a big up day, there is a tendency for a pull back.
Yes, there is a good possibility that the ES pulls back further, but there is just as good of a chance that the ES holds at some point and starts going back up, which is the exact pattern that has helped the ES higher for the last several years.
Today is the busiest day of the week in terms of economic reports. Our view; we lean to selling the early rallies and buying weakness. If the ES starts taking out yesterday’s lows, the 2420 level could be targeted.
PitBull: CLQ osc -27/-23 turns up on a close above 4405; ESU osc 8/14 turns down on a close belo 245192; VIC osc 0/-1 turns down on a close below 1020
Market Vitals for Thursday 06-22-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.29%, Hang Seng -0.08%, Nikkei -0.14%
- In Europe 10 out of 12 markets are trading lower: CAC -0.28%, DAX -0.02%, FTSE -0.38%
- Fair Value: S&P -3.81, NASDAQ +5.81, Dow -51.77
- Total Volume: 1.3mil ESU, and 900 SPU traded
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