When it comes to the S&P 500 futures (ESZ17:CME), the old saying ‘we are not here to fight city hall’ applies. With the ES up 6 days in a row, and almost no pull backs, it seems like there is no end in sight. Yesterday, when I posted that both the ES and the VIX were trading on their respective highs of the day, the PitBull fired back saying that usually means the ES is close to a high. I have always been a bull market trader, but I have to admit, the continued push higher with no pullbacks is hard to figure out, but one thing i did figure out is not trying to sell it. Its either long or wrong!
On yesterday’s 8:30 CT futures open, the first print in the ES was 2530.25. After the open the ES rallied up to 2532.50, and then pulled back under the vwap at 2529.00 at 9:30 CT. After the early low, the ES sold off a few times under the vwap, and then slowly popped back up to the 2532.00 to the 2532.50 area. From there, it had one last drop down to 2530.25, and then rallied all the way up to 2538.00 around 11:30 CT. After making the high, the ES gradually sold off down to 2532.75, 1 tick under the vwap, as the Russell 2000 (RTYZ17:CME) reversed to lower on the day. After the pullback, the ES traded back up to 2536.25.
At 2:04 the MiM started to show $100 mil to buy, and then popped up to $ 190 million to buy at 2:20. The next move was back down to the vwap at 2533.25 on the 3:15 futures close, but the ES rallied back up to 2536.50 after Globex opened.
The S&P got a boost from internet retailers. Netflix was up 2.9% after UBS raised its price target, and TripAdvisor shares climbed +3.7%. That was enough to push the S&P up 0.1% to 2538.00, its fifth consecutive record close, and its 42nd record close of 2017. The five straight record closes matched its longest streak since February.
While You Were Sleeping
Overnight, equity markets in Asia traded mostly higher, with the Shanghai Composite leading the way at +0.29%. Meanwhile, in Europe, stocks are trading mixed this morning, with a slight bias to the upside, and the FTSE out in front at +0.26%.
In the U.S., the S&P 500 futures opened last night’s globex session at 2535.25, and hasn’t really moved at all. What can I say about these overnight ranges lately? It’s been flat. Last night the ES was held to just 3.25 handles. As of 7:00 am CT, the last print in the ES is 2537.25, up +1.00 handle, with 69k contracts traded.
In Asia, 9 out of 11 markets closed higher (Shanghai +0.29%), and in Europe 7 out of 12 markets are trading higher this morning (FTSE +0.26%).
Today’s economic includes Chain Store Sales, Challenger Job-Cut Report, (7:30 a.m. ET), International Trade (8:30 a.m. ET), Jobless Claims (8:30 a.m. ET), Factory Orders (10:00 a.m. ET), EIA Natural Gas Report (10:30 a.m. ET); Fedspeak — Esther George Speaks (4:30 p.m. ET); Earnings — Costco Wholesale (4:15 p.m. ET).
Our View
There appears to be strength again in Globex, as the ranges are getting tighter and tighter. The last 10 handle pullback was 10.25 handles from Wednesday’s high to last Thursday’s low. Since then, the most this market has managed has been 5-6 handle drops before the buying resumes.
The first three days of the month has seen buying. The PitBull used to talk about how the action will usually dry up after the third day, and with NFP coming up tomorrow, we do think that today has a better chance of seeing some risk coming off the table in the form of profit taking. I’m not sure if that will mean a 10 handle pullback or not, but there looks to be support at the 2530 – 2528 area, and 2528 would be a 10 handle move from yesterday’s high.
PitBull: CLX OSC -20/12 turns up on a close above 50.77; ESZ OSC 44/20 turns down on a close below 2535.10; VIX OSC -6/-10 turns down on a close below 9.23.
Market Vitals for Thursday 10-05-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed higher: Shanghai Comp +0.29%, Hang Seng +0.73%, Nikkei +0.01%
- In Europe 7 out of 12 markets are trading higher: CAC -0.01%, DAX -0.23%, FTSE +0.26%
- Fair Value: S&P -2.60, NASDAQ +4.15, Dow -53.58
- Total Volume: 953k ESZ & 400 SPZ traded in the pit
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