It was a very subdued trading environment yesterday, with the S&P 500 notching one of its smallest intraday ranges since December 2013. The clock is ticking for the fed and today may be the day when they start talking about the unwind of 10 years worth of QE.
The S&P 500 futures (ESZ17:CME) upticked on Mondays close and rallied on Globex overnight, making an early high at 2505.50. The total Globex trading range was only 4.5 handles, 2501.00 to 2505.50. On the 8:30 futures open, the ES traded 2505.00, made a high at 2505.25, and then sold off and ‘double bottomed’ at 2501.50. From there, the ES rallied and ‘double topped’ at 2504.75 before going back down to 2501.25, a new low by 1 tick.
We could do a play by play of the rest of the day’s trade, but there was no trade. It was one big low volume chop. At 1:00 CT, total volume was only 665,000, with 145,000 of that coming from Globex. Clearly traders took the day off in front of today’s federal reserve announcement. The only highlight was Trump warning that the U.S. may have to ‘totally destroy North Korea’ when he spoke at the UN, and that didn’t even move the markets.
Despite new all time highs, the S&P has been seeing some of the narrowest ranges of the year over the last week. Many traders, including the PitBull, think today’s fed announcement may change that, but like I said in yesterdays view, I agree the ES is overdue for a pullback, but I just do not see a big correction coming.
Late in the day the MiM (MrTopStep Imbalance Meter) started showing big for sale, and the ES rallied back up to the high at 2505.75. At 2:45 the actual NYSE Closing Imbalance showed a net sell of $1.458 billion.
In the end it was a very quiet day. The S&P 500 futures (ESU17:CME) settled at 2504.75, up +2.00 handles, or +0.07%, the Dow Jones futures (YMU17:CBT) settled at 22336, up +37 points, or +0.16%, and the Nasdaq 100 futures (NQU17:CME) settled at 5997.00, up 10.25 points, or +0.17%.
While You Were Sleeping
Overnight, equity markets in Asia and Europe were quiet, and traded mixed across the board.
In the U.S., the S&P 500 futures opened last night’s globex session at 2503.75, and traded sideways in a 3.5 handle range. As of 7:20am CT, the last print in the ES is 2502.25, up +0.50 handles, with 100k contracts traded.
In Asia, out of 11 markets closed er (Shanghai %), and in Europe out of 12 markets are trading er this morning (FTSE %).
Today’s economic includes MBA Mortgage Applications (7:00 a.m. ET), Existing Home Sales (10:00 a.m. ET), EIA Petroleum Status Report (10:30 a.m. ET); Fedspeak — FOMC Meeting Announcement (2:00 p.m. ET); FOMC Forecasts (2:00 p.m. ET); Fed Chair Press Conference (2:30 p.m. ET).
‘Sell Rosh Hashanah, Buy Yom Kippur’
Our View: According to the Stock Trader’s Almanac, the week after the triple witching has the Dow down 21 out of the last 26 occasion with an average loss of -1.2% and on top of that the old trading adage ‘Sell Rosh Hashanah, buy Yom Kippur’ hits on Thursday.
Today is the FOMC decision day, and while there has not been much of a trading range lately, that could change today. The fed has to start unwinding, and that could be part of its statement. Our view is that we lean to selling rallies. That doesn’t mean you can’t buy weakness, but we think we could see lower prices.
PitBull: clx osc 15/8 turns up on a close above 50.98; esz osc 30/18 turns up on a close above 2513.78; vix osc -16/-8 turns down on a close below 9.37.
Market Vitals for 09-20-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed higher: Shanghai Comp +0.28%, Hang Seng +0.27%, Nikkei +0.05%
- In Europe 6 out of 12 markets are trading higher: CAC +0.12%, DAX -0.12%, FTSE +0.02%
- Fair Value: S&P -2.13, NASDAQ +6.56, Dow -42.78
- Total Volume: 959k ESZ & 400 SPZ traded in the pit
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