Yesterday’s globex session was held to a 6.75 handle range until 7:30am CT when the Yellen testimony began and the ES popped 8.5 handles to 2436.50. The rally continued going into the 8:30am CT cash open. The S&P 500 futures (ESU17:CME) opened the regular session at 2435.00, and rallied to an early high at 2442.00 just before 9:00am. The Nasdaq 100 futures (NQU17:CME) followed suit, opening at 5761.50, and rallying to 5769.75.
By 9:30, the ES had printed a high of 2442.75, and proceeded to trade in a 5 handle range until the Beige Book release just after 1:00pm. A new high was made at 2443.75, and then things settled down again going into the final 1.5 hours of trading.
As the NYSE MOC came out showing $720 million worth of stock to sell on the close, the ES pulled back a little…a little. A sell off down to 2439.75 closed out the session. From 9:30am until the close, the ESU was held to less than a 7 handle range, and the lack of volume speaks for itself.
In the end; the S&P 500 futures (ESU17:CME) settled at 2440.00, up +15.50 handles, or +0.64%, the Dow Jones futures (YMU17:CBT) settled at 21483, up +116 points, or +0.54%, and the Nasdaq 100 futures (NQU17:CME) settled at 5785.75, up +65.75 points, or +1.13%.
So, what’s next?
I’ve talked to all kinds of people, from analysts, to brokers, to day traders, and the consensus seems to be the same… Big money is sidelined, and everyone is waiting for the bottom to drop out.
If we’ve learned anything in the last 10 years, it’s that the system is rigged, and it’s designed to screw as many people as possible. When I hear people talking about the big crash that’s coming, I can’t help but think that the sheep are being led back to the slaughter. If everyone is stepping in front of the bus and positioning themselves for a break, you have to wonder, what’s going to stop them from getting run right over?
The answer is; nothing. A rally can ruin you just as bad as a break can, and picking tops has become a dangerous business. All news is good news nowadays. We’ve all seen what’s been thrown at this market, and its resilience has been amazing. A lot of people think the party is coming to an end, but what if the party is just getting started?
Now, I’ve said it before, and I’ll say it again; I’m a bull, but I ain’t no fool. A correction is necessary, but I wouldn’t start thinking that we’re on the cusp of a major crash just yet. Don’t forget, the bears have fueled this rally, so why would it stop now?
While You Were Sleeping
Overnight, equity markets in Asia traded mostly higher, led by the Hang Seng Index, which closed up 1.16%. In Europe, all but 1 index is trading higher this morning, fueled by the strength of Janet Yellen’s comments yesterday.
In the U.S., the S&P 500 futures opened the globex session at 2441.25, and spent most of the night trading in a 3 handle range. As Asian markets were closing, and European markets were opening, the ESU caught a bid and rallied up to 2446.50, extending the range to 6.25. The futures have since backed that high, and as of 6:35am CT, the last print in the ES is 2441.25, up +1.25 handles, with 104k contracts traded.
In Asia, 10 out of 11 markets closed higher (Shanghai +0.67%), and in Europe 10 out of 12 markets are trading higher this morning (FTSE +0.09%). Today’s economic calendar includes Weekly Bill Settlement, Jobless Claims, PPI-FD, Bloomberg Consumer Comfort Index, Janet Yellen Speaks, EIA Natural Gas Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 52-Week Bill Announcement, a 10-Yr TIPS Announcement, Charles Evans Speaks, Lael Brainard Speaks, a 30-Yr Bond Auction, Treasury Budget, Fed Balance Sheet, and Money Supply.
Our View
Yesterday, the DJIA futures made a new all time high, and the overnight high in the S&P 500 futures is just five handles from the all time hig. If you bought the Tuesday dip, you should take most of your profits, if you haven’t already.
The water in the bathtub environment suggest that it may be worthwhile to fade some of this action now that we’re at the top of the range, but do so at your own risk, and with smaller size. The pattern of the S&P’s has been to test a big round level like 2400 or 2450 and find resistance there on the first time, but eventually smash through. With this upward momentum coming off of Tuesday’s low, we could see a push through the 2450 level and up to 2460.
Our view is that this rally is not over yet. A new high is going to be made before a 25 handle pullback, and we are looking to buy a small early pullback today and hold into Friday.
PitBull: CLQ osc -5/- turns down on a close below 4401; ESU osc 7/-3 turns down on a close below 241562; VIX osc -6/2 turns up on a close above 1181.
Market Vitals for Thursday 07-13-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 10 out of 11 markets closed higher: Shanghai Comp +0.67%, Hang Seng +1.16%, Nikkei +0.01%
- In Europe 10 out of 12 markets are trading higher: CAC +0.62%, DAX +0.19%, FTSE +0.09%
- Fair Value: S&P -2.81, NASDAQ +2.75, Dow -53.37
- Total Volume: 1.16mil ESU, and 1.8k SPU traded
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