Going into yesterday’s regular session open the S&P 500 futures (ESM17:CME) had traded down to a new low and then opened at 2340.25, down 1.75 handles, but eight handles above the globex low. After the open, the futures found early resistance at Tuesday’s close and then pushed down to 2332.75 just after 9:30 ct, missing a new low by two ticks and a perfect 10 handle rule by three ticks.
After finding that early low, the S&P’s rallied 15.25 handles in about an hour, up to 2348.00. From there, the futures sold off 11.50 handles through the Euro close before finding a low shortly after noon. Again, the futures pushed higher, printing up to 2348.75, up 6.75 handles on the day, before failing again at that area and settling at 2342.75, up three ticks.
Five minutes into the session I posted this in the IMPRO Forum and on the ICE chat:
IMPRO:Dboy:(9:35:44 AM):Hard to like the overall price action of the S&P but MrTopStep has a trading rule that may fit today.
IMPRO:Dboy:(9:35:55 AM):The rule is that the ES ‘tends’ to go sideways to up after a big down day.
While there were some ups and downs in yesterday’s session, at the end of the day, the close was just a few ticks from the prior close as some back and fill action started to take place. Much was made of Tuesday’s selloff, but thinking about it realistically, the S&P’s are still at very high levels, and not much has changed. While the quarter is coming to an end, and there may be some money flows out of stocks, there is nothing fundamentally different in the market.
Sure, there is more chatter of the Trump administrations connections to Russia being investigated, and there are doubts if the new president will be able to follow through on healthcare reforms, but at the end of the day, it is difficult to convince me that the money that flowed into stocks since November came into the markets only because of “faith” in Trump.
While we didn’t pinpoint this week’s action, we knew it did not come as a surprise as we have been talking about the negative stats for weeks after the March quad witching. So, for now, we are watching 2350, and if bulls build a floor there then we look for 2400 and if bears build a ceiling at 2350, then we target 2300.
While You Were Sleeping
Overnight, equity markets in Asia were all modestly higher with the exception of Jakarta, followed by a mixed European session with no real momentum. The S&P 500 futures opened globex at 2342.25, made an immediate low at 2342.00, and rallied early up to 2349.50 soon after the Tokyo open. The ES found a ceiling there and sold back down to 2243.00 after the Euro open, and as of 5:15 am cst the last print is 2344.50, up 2.00 handles, on volume of 92k.
In Asia, 10 out of 11 markets closed higher (Nikkei +0.23%), and in Europe 6 out of 11 markets are trading lower this morning (FTSE -0.14%). Today’s economic calendar includes the Weekly Bill Settlement, Jobless Claims, Janet Yellen Speaks, Bloomberg Consumer Comfort Index, New Home Sales, EIA Natural Gas Report, Kansas City Fed Manufacturing Index, 3-Month Bill Announcement, 6-Month Bill Announcement, 52-Week Bill Announcement, 2-Yr FRN Note Announcement, 2-Yr Note Announcement, 5-Yr Note Announcement, 7-Yr Note Announcement, Neel Kashkari Speaks, 10-Yr TIPS Auction, Fed Balance Sheet, Money Supply and Robert Kaplan Speaks.
Predictit Health Care Odds
Our View: When it comes to the S&P it seems like we are always waiting on the next ‘event’. According to the current market for event futures at Predictit, the ‘odds makers’ suggest there is a 2:1 chance the Obamacare repeal bill will not pass today. My gut says the markets already know that, but that doesn’t mean when the headlines hit that the algos won’t go nuts.
Last night, Republican’s did a major 11th hour push, but it looks like they will still be short the votes to pass the bill.
Today’s economic schedule is the busiest of the week and it also includes an appearance by Janet Yellen. Our view is to be on guard for some type of drop. Sell the early rallies and buy weakness with tight stops.
PitBull: CLK osc -14/-21 turns down on a close below 4785, ESM osc -19/4 turns up on a close above 237740, VIX osc 6/0 turns down on a close 1066.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.10%, Hang Seng +0.03%, Nikkei +0.23%
- In Europe 6 out of 11 markets are trading lower: CAC -0.22%, DAX +0.12%, FTSE -0.14% at 6:00am ET
- Fair Value: S&P -3.49, NASDAQ +2.63 , Dow -54.76
- Total Volume: 1.8 mil ESM and 5.2 k SPM traded
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