As traders, it doesn’t matter what the headlines say, or what the market moving event is. The only thing that matters is that we pick the right direction.
The S&P 500 futures rallied slightly during Friday’s globex session and ‘double topped’ at 2135.25. MrTopStep sold the ES at 2133.75, and then the long wait began. The S&P has always been a quick pay or a quick burn, but if you put the position on at the wrong time of the day, you sometimes have to wait a few hours to start seeing the ES move. Initially that was the case last Friday, then the headlines hit the tape that the FBI was reopening the probe into Hillary Clinton emails. The wire went on to say that “The FBI has learned of the existence of emails that appear to be pertinent to the investigation.”
The FBI initially said they didn’t see the emails as breaking the law but never said the investigation was over and the new emails may shed more light on the possibility that Clinton actually broke the law, throwing the election in doubt and turning the S&P sharply lower.
With so many conspiracy theories flying around,Iran said it was not going to cooperate with any oil production cuts. Both the S&P the dollar and oil dropped while gold rallied.
We could do a play by play of the day’s trade, but we’ll keep it short. The ESZ16 opened higher, rallied a little, then reversed sharply when the FBI / Clinton headlines hit the tape. The double top high price was 2135.25, at 11:45, and the Clinton lows came in around noon. I sold 2133.75s and covered 8 handles lower, just off the lows of the day. I bought 2117 and made 5 handles, making a total of $775.00 on the day. It was a confusing day that started with a stronger than expected US GDP number and ended with late day headlines.
Over the last few weeks I have said many times that there is something missing, or something awry with the markets. With only 8 days until the election, and 46 days till the December Fed meeting, things seem to be gearing up for something, but I just am not sure what it is.
New World Investing Order
Like I said, I could do a big blow by blow of the days ‘twists and turns,’ but that’s not why you read MrTopStep’s Opening Print. I know many of you have spent a lifetime trading and investing. You pour your hard earned cash into newsletters, investment tools, indicators and other things you think help guide you through investing, trading and making money.
As you know, I hate referring to the ‘old days,’ and while I want to keep the rich history of Chicago’s trading floors on my mind, todays investing / trading does not look at all like it did when I started as a runner in the grain room at the CBOT, nor does it look much like it did when I left the trading floor over two years ago. Things are evolving. The old tools we use don’t work anymore, and the new tools we find only last until some algorithmic or HFT coder comes along and includes it into his trading program.
You never hear any of my so called competitors saying things like ‘only 3% to 5% of us will make money and survive.’ They don’t talk about how retail traders are disappearing. They’re more concerned with getting you to pay a lifetime fee for a trading room, or convincing you there is some magic carpet out there that is going to lead you to financial success. There isn’t one. What will work is dedicating yourself to the process.
When we first me, the PitBull asked me if I ‘follow the winners?’ I responded by saying ‘of course I do.’ And that is what we all need to do. Associate with other like minded traders that make money, learn the things that work, and know going into it that if anyone says they make money every day, they are more than likely a fraud. If there is someone making money every day, I assure you MrTopStep could raise millions of dollars to back it.
That said, I am not saying we should not try, I am not saying you can’t do it and, nor am I saying there are not good people out there. What I am saying is it’s going to take a lot more than just switching on your desktop and turning on your NinjaTrader platform and indicators. It’s going to take hard work, time, and some balls. My tools are following volume, using pattern recognition, and using my gut feel. What do you use?
While You Were Asleep
Overnight equity markets in Asia traded sideways to lower. Once Europe opened there was a stronger offer overseas. The S&P futures opened the globex session at 2120 and took a quick dip down to 2114.74 before rallying up to 2130.50 late in the Asian session. The ES traded back to 2124.25 after Europe opened with 132K contracts traded at 7:20 am cst.
Today marks the close of October, then the first of the month portfolio shifting later this week, and a very busy economic calendar. In the S&P’s, it has been a battle for the bulls to control 2140-2150, and for the bears at 2125 and lower. Neither side is winning or converting thus far. As the month closes, this will be the tightest range for October in over 20 years.
In Asia, 6 out of 11 markets closed lower (Nikkei -0.12%), and in Europe 11 out of 11 markets are trading lower this morning (DAX -0.41%). This week’s economic calendar features the two day FOMC meeting followed by announcements, a press conference, 2 other Fed speakers, and 26 additional economic reports including Friday’s non-farm payroll, and 17 U.S. Treasury events. Today’s economic reports includes a 2-Yr Note Settlement, 2-Yr FRN Note Settlement, 5-Yr Note Settlement, 7-Yr Note Settlement, 30-Yr TIPS Settlement, Personal Income and Outlays, Chicago PMI, Dallas Fed Mfg Survey, 4-Week Bill Announcement, 3-Month Bill Auction, 6-Month Bill Auction and Farm Prices.
GS S&P Year End: S&P 2100
Our View: Goldman says that the S&P will close out 2016 at 2100.00 and that may be very close. I know some traders are saying ES 2250.00 or 2300.00, but that would mean the S&P futures would have to rally 120 to 150 handles (points), and that just doesn’t seem possible. What I think is possible is that after the initial ‘shock’ of the election results, like Brexit, the S&P will rally. This week has a very high level of economic and earnings reports. There are exactly 7 days until the election, and with that in mind, we tend to think it could be a busy/choppy week of trade.
Globex volume is again starting the week out low. At 7:20 CT there is only 132,000 ESZ16’s traded. The PitBull told me many years ago that ‘The S&P tends to rally early in the day and early in the week.’ Our view for the day; thin to win may play out and we could see higher prices, but it won’t go without some let downs. Sell the early rallies, keep an eye on the Globex trading range, and buy weakness.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed lower: Shanghai Comp -0.12%, Hang Seng -0.09%, Nikkei -0.12%
- In Europe 11 out of 11 markets are trading lower: CAC -0.79%, DAX -0.41%, FTSE -0.41% at 6:00am ET
- Fair Value: S&P -5.68, NASDAQ -7.50, Dow -83.15
- Total Volume: 2.4m ESZ and 5.8k SPZ traded
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