Buy Stocks / Sell Bonds

If you were, or are bearish, then the end of the second quarter and the impending 4th of July holiday trade may not be a good time for you. One day after the largest decline in a month, the dip buyers came flying back in. U.S. stocks rose, and bonds sold off sharply, as global central bank officials said the era of ultra-low rates and the ‘easy money monetary policy’ could come to an end sooner than most investors may have though.

July is the best month for stocks in the third quarter. As more people decide to take vacations and volumes drop, ‘thin to win’ may take over. Also, oil prices rose for the fifth day in a row.

PitBull: Insane Game

Yesterday, at 11:00 CT the S&P 500 futures (ESU17:CME) made a new daily high at 2438.25. The Nasdaq 100 futures (NQU17:CME) made an early high at 5728.50, and the Dow Jones futures (YMU17:CME) just made it high at 21425.

After a minor pullback, the ES traded up to 2440.50, and the NQ pushed up to a new daily high at 5752.25. The trade was exactly like it was on Tuesday, very few up ticks, and all sell programs, and yesterday it was very small pullbacks, and all buy programs.

At 1:45 CT total ES volume was 1.25 million contracts traded, with 307,000 of that volume coming from Globex. While the the volumes have picked up, most of yesterday’s volume was the shorts covering their positions.

After pulling back to 5737.00 the NQ did a big stop run all the way up to 5755.75, just 10 points under Tuesday’s high at 5765.00, and the ES ‘double topped’ at its 2440.50 high. After a small down tick, the NQ traded 5761.50, just 3.5 points off Tuesday’s high. Later on when I posted “MiM $710 million for sale,” the PitBull came flying back saying “insane game,” and to tell the truth… It really is!

Like the PitBull said, “it’s a funny game!” On Tuesday you couldn’t buy, and yesterday you couldn’t sell.

Let The Algos Do The Driving

For right now, less may be better. I was buying when the ES was selling off on Tuesday, and selling when it was going up on Wednesday. I tend to be a bull, and believe in ‘the trend is your friend,’ but how is someone to know that, after a 110 point drop in the NQ, it is going to rally 87 points the next day. I guess it’s all part of the new world trading order.

The final cash imbalance showed $432 million to sell. The ES triple topped at 2440.50, and the NQ double topped 5764.75. In the end the S&P 500 futures (ESU17:CME) settled at 2438.25, up 20.25 handles, or +0.84%, the Dow Jones futures (YMU17:CBT) settled at 21,404.00, up 111 points, and the Nasdaq 100 futures (NQU17:CME) settled at 5763.50, up 87 points, or +1.56%.

While You Were Sleeping

Overnight, equity markets in Asia traded higher, led by the Hang Seng index, which closed up +1.10%. Meanwhile, in Europe, most majors are trading lower this morning, fueled by the weakness in the dollar. In the U.S., the S&P 500 futures were held to just a 6 handle range overnight.

The ES opened the globex session at 2442.00, and made an early high of 2444.50 in the first 10 minutes of trading. From there, the futures traded sideways until the European, upon which they shot up to make the overnight high at 2445.00. After that, the ES grinded lower over the next few hours, eventually finding a new low at 2439.00 just after 5:00am CT. Once the low was made, the futures began to stabilize, and as of 6:32am CT, the last print in the ES is 2443.00, up 4.5 handles, with 128k contracts traded.

In Asia, 10 out of 11 markets closed higher (Shanghai +0.46%), and in Europe 11 out of 12 markets are trading lower this morning (FTSE +0.25%). Today’s economic calendar includes the Weekly Bill Settlement, GDP, Jobless Claims, Corporate Profits, Bloomberg Consumer Comfort Index, EIA Natural Gas Report, a 4-Week Bill Announcement, a 3-Month Bill Announcement, a 6-Month Bill Announcement, James Bullard Speaks, Farm Prices, Fed Balance Sheet, and Money Supply.

Our View

Well, I had one part of it right yesterday, and it was that the ES tends to go sideways to higher after a big up day. The only problem was that there wasn’t a lot of sideways trade in the NQ. I, like many, fell prey to Tuesday’s ugly close. I can’t blame anyone but myself. I was thinking it would be bullish going into the holiday and fell off my horse. With that said, I really think most people will start cutting out early today, if they haven’t already, and not return until after the 4th of July. Only the trading ‘junkies’ will be trading. Our view is to buy the pullbacks. Friday may be weak, but Monday is a half day. New high soon? You make the call…

PitBull: CLQ osc  5/-20 turns down on a close below 4258; ESU osc  -4/4 turns down on a close below 243477; VIX osc  -2/1 turns down on a close below 921.

Market Vitals for Thursday 06-29-2017

[gview file=”https://mrtopstep.com/wp-content/uploads/2017/06/Market-Vitals-17.06.29.pdf”]

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

  • In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.46%, Hang Seng +1.10%, Nikkei +0.45%
  • In Europe 11 out of 12 markets are trading lower: CAC -0.67%, DAX -0.37%, FTSE +0.25%
  • Fair Value: S&P -2.74, NASDAQ -0.73, Dow -57.92
  • Total Volume: 1.5mil ESU, and 900 SPU traded

Tags:

No responses yet

Leave a Reply