The markets go up, and the markets go down, but lately they only going up. After being on the trading floor and running one of the largest S&P 500 futures desks in the history of the CME, I feel strongly that I can say I have seen it all. From the 1987 Crash, to the 1999-2000 tech bubble, to the Asian currency crisis, to the demise of the ruble, to Gulf War I & II, to 9-11, to the Flash Crash, to the ongoing credit crisis… I have seen it all.
Those are only a few of the events, I can not list them all on today’s Opening Print. I can tell you how I felt looking up at the quote boards that fatal day on September 11th. Brian and I had just gotten back from a two week stay in the United Arab Emirates. From the first second that the news hit the tape and the big screens on the floor show the first jet slamming into the the World Trade center,I knew the world had changed forever. I knew it was not an accident, that it was a terrorist attack. I have seen a lot since my first days on the trading floors and a lot has changed. The thousands of people that used to make up the CBOT, CME and CBOE are gone. The financial district of Chicago was beaten down by the credit crisis and the exchanges are slowly but surely closing all the floors. Sure there are still a few left on the trading floors, but it’s a shadow of its former self.
NOT YOUR AVERAGE YEAR
One of the things I have learned is that the markets can stay quiet for an extended period of time. That is how they are acting now, but as August approaches, September and October are soon to follow. I am constantly looking at historical stats, and the main ones I am looking at are the patterns that occur in the in the third quarter and October. We all know that last year the S&P eclipsed on August 24th, and we all know that September and October are known for its big down drafts, but we also know October is also known as the ‘bear killer.’ The presidential election this year will become front and center and based on the conventions were should be no shortage of news events. We do not think we have seen many years like we have so far and while the presidential cycles are calling for new highs in August before a big drop in September and huge rally in October. We think there could be some very big moves in both directions.
Overnight the Bank of Japan was the headline event. It was a disappointment, not only with their stimulus program, but also those of us who wanted this catalyst to move the equity indexes out of their current range. Asian markets were mostly lower, while the European markets have traded mostly higher this morning. The ESU has seen a little higher globex volume for 5:45 am cst compared to the rest of the week as it currently has traded 190K contracts. The overnight range has been quiet, including an early low in the Asian session at the 2157 demand area and then a high late in the Asian session at the supply area of 2166. The index future has done nothing but chop during the Euro session trading at 2161.75 on last print heading into 6:00 am cst.
Today’s calendar features some noticeable events, but with the Fed and Bank of Japan unable to extend this range, I’m not sure if there is anything on the calendar that will do this. What we do have to watch for is the end of month trade that could bring some volatility into the close.
In Asia, 8 out of 11 markets closed lower (Nikkei +0.56%), and in Europe 8 out of 12 markets are trading higher this morning (DAX +0.47%). Today’s economic calendar includes a 10-Yr TIPS Settlement, GDP, Employment Cost Index, John Williams Speaks, Chicago PMI, Consumer Sentiment, Baker-Hughes Rig Count, Rob Kaplan Speaks, and Farm Prices.
Our View: The total volume on Wednesday was 1.7 million contracts and yesterday it dropped down to 1.6m yesterday. This morning we have some economic and earnings releases to get past and we still think there could be some type of late day ‘walk away’ today. It’s the end of July, the summer is flying past. Our view is geared to selling rallies; you can buy the early weakness and sell the rallies of just sell the rallies. Too many people think the next move in the S&P is 2200 and beyond, I think there has to be a dump first.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 8 out of 11 markets closed lower: Shanghai Comp -0.50%, Hang Seng -1.28%, Nikkei +0.56%
- In Europe 8 out of 12 markets are trading higher: CAC +0.15%, DAX +0.47%, FTSE -0.24% at 6:30am ET
- Fair Value: S&P -5.66, NASDAQ -6.31, Dow -77.94
- Total Volume: 1.6m ESU and 1.6k SPU traded
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