The main index futures markets are all on track for gains of 9% and seeing their largest advances since October 2011.The major indexes are up a whopping +14% from their August 24 low, and up 8.98% in October.
As futures traders, we get up to do battle everyday, but yesterday there was not much to fight. Yesterday’s total range in the S&P 500 futures (ESZ15:CME) was 9.25 points, from 2077.25 low to 2086.50 high. Total volume was the lowest in the last 3 months, 1.2mil contracts traded, which includes 190,000 contracts traded on Globex, pre-8:30ct futures open.
EXTREMELY OVERBOUGHT
The ESZ15 has closed higher 13 out of the 21 trading days in October, and the down days have been very small. On the month, the ESZ futures are up 175 handles, or +9%, and up 13% since making its August 24 Flash Crash lows. Despite weaker than expected GDP data, the index markets sold off early, stayed in a 3 to 4 handle trading range for several hours, and then rallied with the 2:45 cash imbalance showed $130 million in stock to buy on the close. Helping push the S&P higher were strong gains in the energy and healthcare sectors. The S&P’s rally over the last 4 to 6 weeks has left the index in very overbought territory, which would mean that it’s nearing a pull back, but every time the S&P does sell off, and it doesn’t matter if its a 8 or 12 handle sell off, the ‘bids’ come flying back in. When that happens the offer side of the ESZ shrinks and the same algos that pushed the futures lower are now chasing stops on the upside.
The dollar also lost ground after official data showing the US economy is slowing, but at the end of the day, neither the weaker dollar or weaker than expected GDP could stop the S&P from surging higher. It’s 7:30 pm CST and I just finished the video and today’s report as the ESZ15 just traded up to 2088.50 wiping out all of the China sell off. The S&P is overdue and is overbought, but it’s also charging back to S&P 2100. Remember traders, we’re not here to fight city hall, and if the ES is going up we want to go for the ride.
In Asia 10 out of 11 markets closed lower (Shanghai Comp. -0.14%), and in Europe 8 out of 12 markets are trading lower (DAX -0.35%). Today’s economic calendar includes Personal Income and Outlays, Employment Cost, Chicago PMI, Consumer Sentiment, John Williams speaks, Esther George speaks, and earnings from Anheuser busch Inbev Sa (BUD), Brinks Co (BCO), CBOE Holdings Inc (CBOE), Chevron Corp (CVX), Choice Hotels Intl Inc (CHH), Colgate-Palmolive Co (CL), CVS Health Corp (CVS), Exxon Mobil Corp (XOM), Moodys Corp (MCO), Phillips 66 (PSX), and Valero Energy Partners LP (VLP)
Our View: The PPT fueled rally continues. While the rally ‘appears’ to be narrowing the futures are still moving up. Additionally, there are a lot of buy stops that go from the 2086 level all the way up to 2106-2108. Our concern today is that it’s the last trading day of October, and there could be a possible MrTopStep Walk Away trade. We had a good week trading and anything we do will be half size. No reason to give anything back…sell the early rallies (See MrTopStep Walk Away Trading Rule) and buy weakness.
As always; please use protective buy and sell stops when trading futures and options.
‘The S&P 500 Futures 2075 Back and Fill’
MrTopStep WEBINAR:
Please join MrTopStep’s Danny Riley and Rob from Discovery Trading Group for this Saturdays, October 31, 2015, 10:00am CST webinar.
MISCONCEPTIONS AND REALITIES OF HIGH FREQUENCY TRADING
SPACE IS LIMITED, SIGN UP NOW!!!
- In Asia 10 out of 11 markets closed lower : Shanghai Comp. -0.14%, Hang Seng -0.79%, Nikkei -0.78%
- In Europe 8 out of 12 markets are trading lower : CAC -0.27%, DAX -0.35%, FTSE -0.39% at 7:00am CT
- Fair Value: S&P -6.44 , NASDAQ -9.44 , Dow -84.36
- Total Volume: 1.39mil ESZ and 5.2k SPZ
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