S&P 500 Futures: Day 3 Of 251 Trading Days In 2017

Charts, Commentary, News, Our View, Technical Analysis, The Opening Print

There is a lot of ‘pent up energy’ in the stock market right now. People do not know if they should buy stocks now, or hold off for the next big drop. Personally, I think there is going to be a lot of trading opportunities this year, up and down! If you have gotten off to a slow start, don’t worry. There are exactly 251 trading days in 2017. February and April have the fewest (19), and March and August the most (23), with an average of 20.9 per month, or 62.8 per quarter. Out of a possible 365 days, 105 days are weekend days (Thank God) when the futures and stock exchanges are closed. And you know what? 2017 is not going to be anything like 2016 or 2015.

Some traders will say you have to watch the markets from the time they open to the time they close. Some will say it’s better to put on the trade and push back from the screens, while others say trading at night is better than trading during the day. I think it’s up to the individual trader, and how it fits his or her trading style, but I prefer the 8:30 CT open for the S&Ps.

The ‘day’ session supplies the most trade and volume over the 24 hour trading day, and that is more than enough for me. Some traders do the European session, and then go right into the US open, and keep going. I don’t think the more hours you rack up is going to increase your profitability. After 8 or 10 hours in front of the screens your body gets physically tired and decision making becomes less clear.

As the new trading year kicks into gear, don’t worry, if you miss a few trades, another will be coming your way. While they say politics and trading do not match, 2017 may buck that trend. Just based on Trump’s use of Twitter, calling out the Chinese, Boeing, and the US Intelligence community, just wait till he takes office. Like VP Elect Mike Pence said, ‘it’s not going to be business as usual,’ and the markets know it.

So, if you miss a few trades, don’t sweat it. There are going to be plenty of ‘twists & turns’ this year. And like the title reads above, we are only 3 trading days into the year. This years trading motto; ‘be patient and you’ll get paid.’

Biggest Losers; The Department Stores

Yesterday the S&P was weighed down by weak holiday sales from some of the largest retail chain stores in the US, with Macy’s falling 14%, and Kohl’s down almost 20%. The weakness was a great example of how some of the online retailers have beaten down on the shrinking business model of ‘brick and mortar’ stores. On Thursday, Sears Holdings announced an agreement to sell its Craftsman tool and hardware line for $900 million, and said it was going to close 150 stores. On Wednesday Macy’s said it was planning to close 62 stores and lay off 10,000 workers.

The S&P 500 futures (ESH17:CME) opened lower, sold off early, rallied, and then sold off again down to 2254.00. Like Tuesday and Wednesday, the futures rallied as the MrTopStep MiM went from over $200 million for sale to $100 million to buy, and pushing the futures above 2264 on the close.

In terms of the day’s overall trade, it was steady, but not busy. In terms of the day’s overall tone, the late buy programs took the ES from the 2254.00 low up to the 2264.00 area, above the 8:30 open, and down just two ticks on the day. While the post presidential rally may have slowed for the Dow Jones futures (YMH17:CBT), and with the S&P futures (ESH17:CME) losing steam yesterday, the Nasdaq 100 futures (NQH16:CME) were able to trade up and close at a new all time high.

Asia and Europe

Overnight in Asia, most of the markets were higher, but the benchmark Nikkei and Shanghai indexes traded lower. Europe opened up trading flat, but slightly to the red. The S&P 500 futures made the globex high in the opening ten minutes at 2265.25 before trading lower for much of the night. A low was made at 2261.50 early in the European session, and has last printed 2263.25, down 1.00 handles, with volume at 54k as of 6:40 am cst.

In Asia, 7 out of 11 markets closed higher (Nikkei -0.34%), and in Europe 6 out of 8 markets are trading lower this morning (FTSE -0.15%). Today’s economic calendar includes the Employment Situation, International Trade, Factory Orders, Charles Evans, the Baker-Hughes Rig Count, Jeffrey Lacker Speaks, Treasury STRIPS, and Robert Kaplan Speaks.

Our View

If the ADP employment report came in lighter than expected, does that mean todays jobs number may do the same? There has been quite a bit of job growth over the last 3 to 4 months, and part of that was part time holiday hiring. The non- farm payroll consensus for the December jobs report is 175,000. My guess is that the number comes in a little lower at 155,000. Is that going to be earth shattering news? I do not think so, but once the new algos exploit the headlines, the ES will be moving.

Our view is to look for a counter trend Friday trade. If the ES is down before the 8:30 CT open, we lean to buying it, and sell a gap up, or the first rally above, if the ES rocks higher. This is just for a trade and not the days total direction. According to the Stock Trader’s Almanac, the S&P’s struggle yesterday could be an indication that the index may revert to it’s weak January stats, which historically the indexes start to show weakness after the third trading day of the month. Last year, beginning with Jan 6th, the S&P futures began a string of twelve consecutive 2 million volume days as the index plummeted. You can take it from there…

Market Vitals for Friday 01-06-2017

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Top Notch Trading Morning Bond Numbers

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 -0.35%, Hang Seng +0.21%, Nikkei -0.34%
  • In Europe 6 out of 8 open markets are trading lower: CAC -0.23%, DAX -0.05%, FTSE -0.15% at 6:00am ET
  • Fair Value: S&P -5.20, NASDAQ -3.31, Dow -74.83
  • Total Volume: 1.3m ESH and 6.8k SPH traded
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Danny Riley (1411 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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