Lets just tell it like it is… The stock market does not act well. All of last week, early day rallies gave way to the downside. Over the last few weeks I have said several times that; 1) the S&P 500 futures (ESM17:CME) are in a trading range from 2330 to 2380, and 2) there was some unfinished business on the downside.
There was no change in Thursday’s overall price action. After opening lower the ESM ‘double topped’ at the 2345.00 level, and about an hour into the session started to reverse. After a prolonged sell off, the ESM made its daily low at 2330.25 and then rallied back up to the 2336.00 area before it ‘flunked’ down to a new low at 2329.50. When this happened I put this out in the forum:
Dboy:(2:54:33 PM) : if I were long over the weekend I’d be concerned about how weak the ES acts.
Dboy:(2:54:58 PM) : every rally fails. big or small!
Not long after that post the ES sold off down to a new low at 2326.00, bounced up to 2332.00, and then got hit by another sell program that pushed the futures down to 2324.00. We could do a big blow by blow of all the ups and downs but the bottom line is the markets act sick. There are just too many moving parts that can not be connected right now and some are getting serious.
I had a discussion with the former head of prop trading at Goldman Sachs over the weekend, and I told him I think the longs have to be careful, that it’s that time of the year. He asked what my thoughts on the market were. I told him that ‘I’m a bull but I ain’t no fool.’
The Fed talking about paying back the 4.5 trillion in bonds is the number one thing I think could, or will, reverse the markets. In the short term Trump was great for the markets, but as he gets his feet wet, he’s starting to scare the world. The guy is not afraid to use U.S. military assets, and has clearly displayed it.
PitBulls says 2318 then 2280. I think we bounce early this week, but the story below is the big show…
Fed Puts Together Plan to Unwind Securities Portfolio
As central bank officials hammer out details, the size and speed of process are crucial consideration
READ THE FULL WALL STREET JOURNAL ARTICLE HERE
When I sent PitBull this article he sent this back to me:
I’m with you, but two things jump out at me…
1) Are there too many eyes on 2280-2318?
2) If the economy starts to slow, then will the Fed still unwind its portfolio? Markets have been unwinding the inflation trade for a while, this suggests economic headwinds.
While You Were Sleeping
Overnight, The global markets were muted due to all the European stock markets that closed for the holiday. While the U.S. stock markets were closed on Good Friday, the major European indices are closed Today. This kept a lid on the S&P 500 futures, that mainly traded in a four handle range, until 6:50 CT when the ESM17 started to pop. Total volume on Globex is low, only 70,000.
In Asia, 8 out of 11 markets closed lower (Nikkei +0.11%), and in Europe the FTSE, DAX, CAC, IBEX and Italy’s MIB are closed for the Easter holiday. There are a total of 16 economic reports,12 t-bill or t-bond auctions or announcements, and 5 federal reserve bank presidents speaking this week. Today’s economic calendar includes the Empire State Manufacturing Index, Housing Market Index and Stanley Fisher gives remarks on “Monetary Policy Communication” at the Columbia School of International and Public Affairs Inaugural Lecture on Central Banking in New York City, with audience Q&A.
Looks Bad; Get Ready For The RIP
Our View: The Chinese and Russians are shadowing the U.S. Navy strike group as it approaches the Korean peninsula. If there is one thing that is 100% clear, it’s that President Trump is not afraid of war, or the use of U.S. military assets. This may sound funny, but on my list of reading material, trading goes first, but the world’s militaries and ongoing wars is a close second.
Almost 10 years ago Putin warned the world / U.S. that he was going to rebuild their military, and he did. The Russian military has gone from mothballs to some of the most high tech military equipment in the world. The Russians have the ability to set up no fly zones just about anywhere with the S-400, and they have 4,000 to 5,000 battlefield nukes that they talk about using quite often.
The world has watched the U.S. go from launching 60 Tomahawk cruise missiles on a Syrian air base, to dropping one of the world’s largest non-nuclear weapons in the world. While the French elections may be important, every news story in the world is being overshadowed geopolitical concerns.
Our view goes against most everyone’s view. We think everyone is short, and while Trump may want to try and scare North Korea, he is not going to start a war. We think there is a good possibility that the ES trades back up to, or above, 2350.00 either today or tomorrow.
PitBull: CLM osc 23/14 turns up on a close above 5484, ESM osc -13/-6 turns up on a close above 235066, VIX osc 33/8 turns down on a close below 1596.
Market Vitals for Monday 04-17-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/04/Market-Vitals-17.04.14.pdf”]
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed lower : Shanghai Comp -0.75%, Hang Seng -0.21%, Nikkei +0.11%
- In Europe the FTSE, DAX, CAC, IBEX and Italy’s MIB are closed for the Easter holiday
- Fair Value: S&P -3.58, NASDAQ -1.26, Dow -66.82
- Total Volume: 1.58 mil ESM and 5.2 k SPM traded
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