The US Federal Reserve laid the groundwork for a December rate hike. The Bank of England increased interest rates for the first time in 10 years. Corporate earnings continue to beat expectations, GOP’s ‘Tax Cuts and Jobs Act’, and Trump picking Fed governor Jerome Powell as next Fed president all weighed on the index markets.
After an overnight drop down to 2563.50, the ES rallied all the way back to 2576.00, with 191,000 ES contracts traded on Globex. On the 8:30 CT open, the ES traded 2575.00, retested the 2576.00 Globex high, and then sold off down to 2573.00. The Nasdaq 100 futures (NQZ17:CME) had an early sell off under the vwap, then bounced when the ES traded back up to 2575.25, and in came the sell programs.
It looked like traders were selling the earnings and the tax plan news. At 9:15 CT the ES made a low at 2562.25, and then rallied up to 2566.50, pulled back a few handles, then ripped back above the vwap up to 2573.25. The next move was back down to 2566.75 as Apple was making new lows. When Paul Ryan came on TV talking about the tax plan, the ES popped back up to 2575.25. At 11:30 total volume was high, 865,000 ES traded.
After the open, the Dow futures (YMZ17:CME) -0.40% to 32280, and the S&P and Nasdaq futures both fell -0.50%. While the selloff seemed to indicate negative price action, the rally back showed just how resilient the markets really are. After the NQ rallied all the way up to 6227.00, I went out on Twitter and said that I thought the ES and NQ had made a high, but as President Trump came on TV at 11:45 talking about the roll out of the tax plan, the NQ that sold off down to 6215.50, ripped back up to 6225.75.
While the NQ was moving, the ES was not. After making the 2575.25 high, it grudgingly sold off down to the vwap at 2571.00, just before President Trump announced Jerome Powell as the next federal reserve president. As the MiM ‘flipped’ from small to sell to $166 million to buy, the ES traded back up to 2577.25, and then up to 2578.25 as the MiM went to $360 million to buy.
The early trade was about a big drop and a big pop, but after the initial moves things got real quiet until late in the day. The way it looked to me was, the guys with the better seats knew they had them to buy all day, that’s why the ES never really pulled back after trading back up to the 2575.00 area. When the MiM flipped the ES futures started going ‘bid’ right away. It was a dead giveaway. The final NYSE MOC came out buy $1.15 billion, and the ES went on to settle at 2576.75 on the 3:25 futures close.
After the bell APPLE reported quarterly revenue of $52.6 billion, an increase of 12 percent from the year-ago quarter, and quarterly earnings per diluted share of $2.07, up 24 percent.
VIX 9.67
In the end the S&P 500 futures (ESZ17:CME) settled at 2576.75, up +2.00 handles, or +0.07%; the Dow Jones futures (YMZ17:CBT) settled at 23444, up +72 points, or +0.30%; the Nasdaq 100 futures (NQZ17:CME) settled at 6235.75, down -5.00 points, or -0.08%; and the Russell 2000 (RTYZ17:CME) settled at 1496.10, up +4.20 points or +0.28% on the day.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the upside, led by the NIKKEI, which closed up +0.53%. In Europe, stocks are also trading modestly higher, with the DAX leading the way at +0.29%.
In the U.S., the S&P 500 futures opened last night’s globex session at 2577.50, and was held to just a 3.50 handle range overnight. This piece was written before the release of the jobs data, so it’s obvious that traders were sidelined in anticipation of this mornings numbers. As of 7:00am CT, the last print in the ES is 2578.50, up +1.75 handles, with 80k contracts traded.
In Asia, 7 out of 11 markets closed higher (Shanghai -0.36%), and in Europe 9 out of 12 markets are trading higher this morning (FTSE +0.12%).
Today’s economic and earnings calendar includes Employment Situation (8:30 a.m. ET), International Trade (8:30 a.m. ET), PMI Services Index (9:45 a.m. ET), Factory Orders (10:00 a.m. ET), ISM Non-Manufacturing Index (10:00 a.m. ET), Baker-Hughes Rig Count (1:00 p.m. ET)Fedspeak: Neel Kashkari Speaks (12:15 p.m. ET) and earnings from Duke Energy (7:00 a.m. ET), Sothebys (7:00 a.m. ET).
Job’s Friday
Our View: It’s hard to deny the markets right now, and it has been that way for a long time. While some people are still calling for a selloff, I’m thinking about new all time highs. The ESZ contract high is 2585.50, and above there I have 2604.00, and then 2630.00. I agree… there has to be a pullback, but I just do not think a big drop is coming. Our view is to sell the early gap higher, or the first rally above, and buy weakness. Buy stops start above 2583.00 and go up to 2590.00.
Market Vitals for Friday 11-03-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/11/Market-Vitals-17.11.03.pdf”]
- In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.36%, Hang Seng +0.30%, Nikkei +0.53%
- In Europe 9 out of 12 markets are trading higher: CAC +0.06%, DAX +0.29%, FTSE +0.12%
- Fair Value: S&P -3.09, NASDAQ -1.68, Dow -67.85
- Total Volume: 1.27mil ESZ & 568 SPZ traded in the pit
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