November has been a record month for the stock market. The Dow Jones Industrial Average is up over +6%, the S&P +4.1%, the Nasdaq Composite is up +1.75% and the Russell 2000 is up a whopping +11%.
Crude oil futures traded up to $49.20 on Tuesday, then sold off down to $44.82 and the S&P futures (ESZ16:CME) sold off down to 2196.25 in the early part of yesterday’s trade. We have always said it would be hard for Iran and Saudi Arabia to agree to any type of oil ‘production freeze’ with so many wars going on in the Middle East. As the US economy picks up steam, and Donald Trump prepares to take over the White House, there is a big debate about what’s driving the S&P higher, we think it’s both of these factors.
After a fairly quiet overnight Globex session, the S&P 500 futures (ESZ16:CME) opened at 2200.25, up one tick. The futures then failed to hold above 2200 as sellers pushed the index down to 2196.25 before reversing all the way back up to 2209.50 late in the day. The MiM started showing $150- $200 million for sale, and the ES pulled back to the 2206.00 area before dropping down to 2201.25 as the MiM began to build to the sell side. At 2:24 the actual imbalance showed MOC sell $940 million, and the ES popped back up to the 2204.00 area 5 minutes before the futures close. In a nutshell the days overall trade was quiet, the ES made a lower low, and a lower high, from Monday’s trade.
GLOBEX
Overnight equity markets in Asia were mostly higher. Europe opened with a solid bid helping push the S&P futures to within ticks of a new all time high print. The globex session began with the ESZ pushing back down to 2200.75 early in the Asian session, and from there the index began to grind higher, gaining momentum after the Euro open. A high was made at 2210.25, up 6.50 handles, and now sits just a handle below that, on volume of 126k as of 6:34 am cst.
Yesterday, as the calendar began to get busy, so did the S&P. The ES traded in a 13.25 handle range with 1.4 million contracts traded. We have been saying that bulls need to secure 2200 as a floor, and while it did break yesterday, it didn’t show as resistance and stay underneath there very long. Then, in the overnight session, 2200 showed as support once again.
The 2210 area is what seems to be resistance, as it first touched on Friday’s close leading to a Sunday night globex trade below 2200, then again twice on Monday. A retracement was made each time this area was tested. This morning the futures are again battling this spot. It looks like 2210 is becoming just as pivotal as 2200.
Whats Next For Bulls?
Today’s calendar is busy here in the US, and there is also the OPEC meeting that seems to have everyone on edge. The next step for bulls is to clearly break the 2210 level and begin to build a floor there. Going into the end of month trade, the December open, NFP, and now the FOMC announcement two weeks from today, it would make sense for some risk to leave the table after such a run up in November. If you notice, once again it’s the Euro session that is bidding the S&P’s higher, while the cash session seems to be weaker and less involved.
In Asia, 7 out of 11 markets closed higher (Shanghai -1.00%), and in Europe 10 out of 11 markets are trading higher this morning (FTSE +1.00%). Today’s economic calendar includes a 2-Yr Note Settlement, a 5-Yr Note Settlement, a 7-Yr Note Settlement, a 10-Yr TIPS Settlement, MBA Mortgage Applications, Robert Kaplan Speaks, ADP Employment Report, Personal Income and Outlays, Jerome Powell Speaks, Chicago PMI, Pending Home Sales Index, EIA Petroleum Status Report, Jerome Powell Speaks, Loretta Mester Speaks, Beige Book, and Farm Prices.
Oil up 7%
Our View: Round and round the markets go, where they stop nobody knows. The ESZ made a lower low and a lower high than Monday’s trade. Not sure what that means, but it still feels like you can sell the rallies. Today is the last trading day of November, Thursday is the first trading day of December, and it’s followed up by Friday’s jobs report. Despite my feel, there could be some buying tied to the month end and and the new month.
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 -1.00%, Hang Seng +0.23%, Nikkei -0.07%
- In Europe 10 out of 11 markets are trading higher: CAC +0.54%, DAX +0.30%, FTSE +1.00% at 6:00am ET
- Fair Value: S&P -1.16, NASDAQ +0.10, Dow -11.20
- Total Volume: 1.4m ESZ and 4.9k SPZ traded
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