The PitBull said he is still concerned about the Dow Jones Transports being weak, and that he sees weakness in certain stocks. I am not a stock tape reader, but I do not think you have to be one to know that the markets are extremely extended, but that’s nothing new. What I think is that it’s the ‘same old, same old’, meaning the historically low interest rates continue to push stock buybacks, and that there is no place to go for investors but the stock market.
Yesterday, at 12:40 CT, the S&P 500 futures (ESU17:CME) had been stuck in a 4 handle trading range from 2473.00 to 2469.00. The Nasdaq 100 futures (NQU17:CME) that traded 5921.25 on the 8:30 ct futures open, dropped and popped several times, trading above and below the vwap. The NQ was acting weak, but we think it’s all part of the continued rotation between the DOW, S&P and Nasdaq.
The next push was a NQ ‘triple top’ at 5900.00, just above the vwap, and then a drop down to 5894.75, a lower higher and a higher low. The ES traded back up to 2471.50, and then down ticked as the NQ dropped. It was a game of equity futures ping pong all day long.
Later on, the MiM started showing $225 to $250 million to buy, and both the ES and the NQ were holding below their respective vwaps, but out came a story by the Wall Street Journal titled ‘Special Counsel Mueller Impanels Washington Grand Jury in Russia Probe’ (https://www.wsj.com/articles/special-counsel-mueller-impanels-washington-grand-jury-in-russia-probe-1501788287), and the NQ quickly sold off down to 5879.50 and the ES down to 2556.25. After that, both markets bounced slightly, as the MiM increased to $272 million to buy. At 2:45 the actual MOC from the NYSE came out buy $900 million.
Are the markets setting up for a sell off? They very well could be, but until something changes, we think things are going to continue as they are.
In the end it was a slow day, and had the late headline not hit the tape, the ES would not have done 1 million or more contracts. That said, it was the fourth day in a row that the ES traded up to, but failed to take out, the 2475.00 level.
Paul Tudor Jones Clients Pull 15% From Main Hedge Fund
I remember when Paul ‘Tudor’ Jones nailed the 1987 crash and made his name in the hedge fund world. For weeks leading up to the crash, Tudor continued probing the downside, selling almost everyday. Everyone on CME trading floor knew he was selling, and calling for a big let down. In the late 1980s and into the 1990s his fund racked up some big returns, but the days of the big ‘macro’ funds have seen some hard times, and Tudor has not been left out of the sea of change. Below is a story of how the famed hedge fund trader and how his funds have not made any money in several years, and continue to see the customers take back their money.
Read the full article here
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the down side. In Europe, stocks are also trading mixed, but with a slight bias to the up side, as traders wait for the jobs report due out at 7:30am CT.
In the U.S., the S&P 500 futures opened last night’s globex session at 2470.75, and by 7:00pm CT had found an early low at 2467.75. Since then, the ES slowly drifted higher throughout both the Asian and European sessions, and is currently trading on the highs. As of 6:40am CT, the last print in the ESU is 2475.00, up +3.25 handles, with 102k contracts traded.
In Asia, 7 out of 11 markets closed lower (Shanghai -0.35%), and in Europe 7 out of 12 markets are trading higher this morning (FTSE +0.15%). Today’s economic calendar includes the Employment Situation, International Trade, the Baker-Hughes Rig Count, and Treasury STRIPS.
Our View
Yesterday was the 12th consecutive day of a close in the 2470’s. Right now, the ES is trading at 2475.00, almost in the middle of the recent range. NFP is due out this morning, so I would expect to either clear the buy stops I have been writing about over 2478, with a settlement today at a new all time high, or a move to close below 2470. All of this may be wishful thinking, as the pain trade would be another close in the 2470’s.
Our view is not to fight the intraday trend today. If they start running the buy stops, we want to buy shallow dips early, or if they start to sell below 2470, we think we see a new low for the week. We think the best trades will come early, and after the Euro close the markets will die, as traders have just a month of weekends left in the summer.
Market Vitals for Friday 08-04-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/08/Market-Vitals-17.08.04.pdf”]
- In Asia 7 out of 11 markets closed lower: Shanghai Comp -0.35%, Hang Seng +0.12%, Nikkei -0.38%
- In Europe 7 out of 12 markets are trading higher: CAC +0.20%, DAX +0.13%, FTSE +0.15%
- Fair Value: S&P -2.58, NASDAQ -0.72, Dow -56.62
- Total Volume: 1.1mil ESU, and 530 SPU traded in the pit
No responses yet