President Trump always talks about ‘fake news’, but most of it is tied to stories that revolve around him. Yesterday, when Apple jumped $2.00 after the open, it was the Dow Jones news wire that was blasting out the ‘fake’ news. While Dow Jones said it had a ‘technical error’ which caused the portal to report several fake stories, the big one was that Google was acquiring Apple for $9 billion, and that the deal was pre-arranged with Steve Jobs in his will.
The public was late to the party, and the ‘algorithmic news’ trading systems locked right on to the story, pushing Apple’s stock up about $2 to $158 per share. The headlines included news that Google employees would take over the Apple headquarters and receive 9 Apple shares for every share of Google stock owned, and that the deal was set to close tomorrow (today). Not long after, Apple’s stock sold back off down to $156.00 a share, and the fake stories were removed by DJ.
It happened so fast most people only saw Apple’s stock jump, but never knew the reason why. It was a good example of how the news wire algo’s trade off the news before the public gets the story. If you are someone that believes it’s a level playing field, just remember one thing, algorithmic and high frequency trading make up over 70% of the daily volume.
Not long after the debacle, Dow Jones put this out:
“Please disregard the headlines that ran on Dow Jones Newswires between 9:34 a.m. ET and 9:36 a.m. ET. Due to a technical error, the headlines were published. All of those headlines are being removed from the wires. We apologize for the error.”
Yesterday, the S&P 500 futures (ESZ17:CME) first print was 2548.75, total Globex range was 2549.25 – 2543.00 w/ 125,000 contracts traded. After a small down tick the ES started to run some buy stops, initially pushing the ES up to 2553.25, and then quickly dropped back down to the vwap at 2549.00, before getting hit by a few index sell programs that pulled the ES down to 2543.50. From there, the ES triple topped at 2537.00 and then traded down to 2542.75. The next move was back up to 2548.00, back down to to 2545.50, and then back up to 2548.50. After another pullback down to 2545.25, the ES started going back up as the MiM started showing $275 million to buy. The MiM flipped to $114 million to sell, and then flipped back to the buy side on the 2:45 cash imbalance. The actual NYSE MOC came out $233 million to buy, and the ES traded back up to 2449.50.
It was a slightly better day for trading, and total ES volume was a little higher. For the most part, if you didn’t sell the rally after the open you missed the best trade of the day, and what you were left with was buying weakness, but it took almost 4 hours to push the ES back above 2549.00. It seems like traders are very risk adverse right now, and for good reason. With the S&P up 270% since its March 2009 credit crisis low, the constant threat of North Korea’s ballistic missile tests, and threats of war, it seems like even the smallest miscalculation could have cataclysmic consequences.
In the end the S&P 500 futures (ESZ17:CME) settled at 2548.50, up +4.75 handles, or +0.18%; the Dow Jones futures (YMZ17:CBT) settled at 22784, up +73 points, or +0.32%; the Nasdaq 100 futures (NQZ17:CME) settled at 6065.25, up +0.75 points, or +0.01%; and the Russell 2000 (RTYZ17:CME) settled at 1510.00, up +2.40 points or 0.15% on the day.
While You Were Sleeping
Overnight, equity markets in Asia and Europe traded mixed across the board. Ranges were tight, and it felt like a lot of traders were sidelined, waiting for a reason to jump back in.
In the U.S., the S&P 500 futures opened last night’s globex session at 2548.75, and was held to a 5.5 handle range. The ES is currently trading on the lower end of the range, and as of 7:20am CT, the last print is 2546.50, down -2.00 handles, with 96k contracts traded.
In Asia, 7 out of 11 markets closed higher (Shanghai +0.18%), and in Europe 9 out of 12 markets are trading lower this morning (FTSE -0.19%).
Today’s economic includes the MBA Mortgage Applications (7:00 a.m. ET); JOLTS (10:00 a.m. ET); Fedspeak — Charles Evans Speaks (7:15 a.m. ET); FOMC Minutes (2:00 p.m. ET); Earnings — BlackRock (6:30 a.m. ET), Delta Air Lines (7:00 a.m. ET).
Our View
Today the fed releases the minutes from the last meeting. Overall, they do not tend to be market moving events. Yesterday’s rally helped shares recover from modest losses on Monday when trading volume fell to its lowest level of the year for a full trading day. Clearly, the higher the markets go, the less volume there is. The public is afraid the markets are up too much, and continue to look for a pullback that never seems to come. I still think there could be a couple more years left in the bull market. Our view; you can sell the gap up opens, or the first rally above the gap, or wait and buy the pullbacks. I think if the ES continues to back and fill, the next move could be up to 2558-2560. On the downside we’re looking for 2537-2539.00, 2532.50, and then the 2529.00 area.
PitBull: CLX -17/3 turns down on a close below 4787, ESZ osc 32/23 turns up on a close above 256429, VIX osc -7/-9 turns down on a close below 926.
Market Vitals for Wednesday 10-11-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed higher: Shanghai Comp +0.18%, Hang Seng -0.36%, Nikkei +0.28%
- In Europe 9 out of 12 markets are trading lower: CAC -0.44%, DAX -0.14%, FTSE -0.19%
- Fair Value: S&P -2.00, NASDAQ +3.06, Dow -52.10
- Total Volume: 1.14mil ESZ & 649 SPZ traded in the pit
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