The slow grind in the S&P 500 futures continued yesterday with overnight weakness on Globex, and a quick run of some downside sell stops. The e-mini S&P 500 futures (ESM17:CME), which had been holding at the 2381.00 level for the last few sessions, finally gave way. Despite the 7 handle drop, volume ‘barely’ picked up.
After a sell off down to 2375.50 at exactly 10:00am CST, the futures were trading above 2382.00 an hour later. The next move was back through the vwap and down to 2380.00. On the way down there were buyers on almost every down tick. After the Fed headlines hit the tape, the ESM17 rallied up to new high at 2386.00, and then sold off down to 2382.25 on the 3:15 futures close. When you take out the 95,000 ESMs traded on Globex, total volume was around 980,000 contracts, that would be considered extremely low for the second day of a two day Fed meeting.
The In’s And Out’s
Look, I could do all the ins and outs of yesterday’s trade, but it was another slow, low volume day on a list of many lately. The main drivers of Wednesday’s trade were the dollar, bond yields and the Dow all moving modestly higher. It was a day of punchy trading in the ES, with morning weakness, and a small rebound after they kept rates unchanged. Despite some warning signals about the economy’s overall health, the Fed’s statements did not indicate any change in its plans to raise interest rates at least 3 times in 2017. Over in ‘oil land’, the futures bounced, despite some weak inventory numbers, and the dollar extended its gains, despite some weak economic data.
Healthcare Vote Today
Politico.com:
7:09 (US) House of Reps said to vote on Healthcare bill tomorrow; GOP leaders indicating they have support for passage – Politico – Report notes about 18 Republicans still remain publicly opposed to the measure, suggesting the vote will be very close. At least two-dozen members are still publicly undecided. Legislation follows today’s agreement between Trump and Rep Long (R-MO) on $8B in additional funding for pre-existing conditions, which HFC chairman Meadows said his members will support.
Read the full Politico.com article here
When this news story broke, the (ESM17:CME) was trading around the 2383.50 level, and not long after, the futures rallied back up to 2386.50.
While You Were Sleeping
Overnight, Asian equity markets had a mostly lower tone, with the exception of the Nikkei, which rallied moderately. However, Europe is green across the board this morning with every market higher, including the DAX hitting new all time highs, and the CAC up moderately ahead of the second round of French elections. In the U.S., the S&P 500 futures opened globex at 2382.00. A low was made at 2381.25 before rallying up to 2387 in the Asian session. From there, the ESM crept up to a high at 2390.75, and as of 7:00 am cst, the last print is 2390.00, up 6.75 handles, with just under 95k contracts traded.
In Asia, 7 out of 11 markets closed lower (Nikkei +0.70%), and in Europe 12 out of 12 markets are trading higher this morning (CAC +0.82%). Today’s economic calendar includes the Weekly Bill Settlement, Chain Store Sales, Challenger Job-Cut Report, International Trade, Jobless Claims, Productivity and Costs, Gallup Good Jobs Rate, Bloomberg Consumer Comfort Index, Factory Orders, EIA Natural Gas Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, Treasury STRIPS, Fed Balance Sheet, and Money Supply.
From UBS
Our View
I’m still betting the ES pops to new highs by the end of the week. It’s one big back and fill pattern. Yesterday, the ES ran the stops under 2381, and today I think they run the buy stops above 2391. The earnings are good, and the Fed is on track to raise interest rates in the June meeting.
Our view is unchanged. Marko Kolanovic from JP Morgan is saying to buy bank puts going into Friday’s job number, and be short for the French vote. While he made some great calls over the last few years, he has basically been short from 2300 for most of the year.
JPMorgan Quant Says Buy Bank Puts Before Jobs Data, French Polls
I am betting that he is wrong again. Our view is for higher prices today. You can take if from there.
Market Vitals for Thursday 05-04-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/05/Market-Vitals-17.05.04.pdf”]
- In Asia 7 out of 11 markets closed lower: Shanghai Comp -0.26%, Hang Seng -0.05%, Nikkei +0.70%
- In Europe 12 out of 12 markets are trading higher: CAC +0.82%, DAX +0.73%, FTSE +0.38%
- Fair Value: S&P -3.77, NASDAQ -3.12, Dow -69.15
- Total Volume: 1.0 m ESM and 5.7 k SPM traded
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