Before the open I pointed out that there was a big line of buy stops in the September S&P 500 futures (ESU15:CME) that started above 2096.00 and ran all the way up to 2106.00. After pulling back off the early Globex high, the ESU15 opened at the 2098.50 level and then started moving up into the buy stops I pointed out, making a mid-morning high at the 2107.00 area.
When the ESU15 traded up to the 2105-2106 level, I told the traders in the MrTopStep trading room that I thought we were “at or near the highs of the day”, and at 11:40 CT the ES traded all the way back down to the 2093.00 area. There was another move back up to the 2097 area, back down to new lows at the 2090.50 level, back up to VWAP at 2099, and then a sell off down to the 2093.50 area going into the 3:00 CT cash close.
Do you want to know why the S&P futures moved up and down like they did? Because the algorithmic trading programs ran the buy stops, and then ran the sell stops, all day long. The Nasdaq futures (NDU15) and crude oil futures (CLU15) seemed to keep a lid on the markets, and despite the DOW futures (YMM15) closing down less than -0.10%, and the S&P futures closing down only -0.31%, the selling seemed to pick up late in the day. As for the day’s overall volume, it was steady, and the S&P’s overall tone was weak, but nothing big stood out.
Conflicting headlines of the the Fed
We are not 100% sure how the S&P will act as the September Fed meeting approaches, but we do think the markets will rally some time thereafter, and we still think S&P 2200.00 by the end of the year.
JOBS
The focus is going to quickly shift over to the jobs numbers on Friday morning. Goldman Sachs raised their non-farm payroll estimate from 210,000 to 225,000. According to Thomson Reuters, economists expect a consensus of 223,000 with an unchanged unemployment rate of 5.3%. MrTopStep thinks the jobs number will come in higher.
The markets are, churning and while the internals may be weakening, the S&P futures are only 7 points away from S&P 2100.00. You can take it from there.
In Asia, 7 out of 11 markets closed lower (Shanghai Comp. -0.89%), and in Europe out 8 of 12 markets are trading modestly lower this morning. Today’s economic schedule starts with the Chain Store Sales numbers, Challenger Job-Cut Report, Jobless Claims, Gallup US Payroll to Population, EIA Natural Gas Report, 3 and 6 Month T-Bill Auctions, Treasury STRIPS, Fed Balance Sheet, Money Supply and earnings from KORS, ZNHA, VIAB, LGF, BOX, MNST, ED, NVDA, DUK, AGN, MYL, AIRM, BRS, DRYS, TA, EOG, EAT, APA, IEP, SEAS, HII, TDC, BECN, DDD, SFM, TPC, WIN, NYT, MHK, BCE, and SUNE.
Our View: There is another heavy round of economic and earnings reports out this morning. Unless we are missing something the S&P is range trading because it has nothing else to do. The ES does not want to go up or down much. Our view is to sell the early rallies and buy weakness. It’s the same movie being shown over and over.
As always, please use protective buy and sell stops when trading futures and options.
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In Asia 7 out of 11 markets closed lower : Shanghai Comp. -0.89%, Hang Seng -0.57%, Nikkei +0.24%
- In Europe 8 out of 12 markets are trading lower : CAC -0.02%, DAX +0.05%, FTSE -0.25%, MICEX -0.17%, at 5:30 am CT
- Fair Value: S&P -6.02 , NASDAQ -8.16 , Dow -71.82
- Total Volume: 1.38mil ESU and 4k SPU traded
- Economic calendar: Chain Store Sales, Challenger Job-Cut Report, Jobless Claims, Gallup US Payroll to Population, EIA Natural Gas Report, 3 and 6 Month T-Bill Auctions, Treasury STRIPS, Fed Balance Sheet, Money Supply .
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