S&P 500 Futures: Hump Day Meets ‘Thin to Win’

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So far so good in 2017. In the last two days, the S&P 500 futures have rallied 31 handles, or +1.4%. The rally has been a combination of a lack of sellers (not everyone is trading), institutional cash buying, and buy stops above in the S&P. This combination equals a ‘perfect storm’ to the upside, with little to no pull back. As we have always said, the last three trading days of a month, quarter or year end, and the first three of the new month, new quarter, and new year, always see buying and selling, but this year it has really stuck out.

With the S&P (ESH17:CME), the Nasdaq 100 Futures (NQH17:CME), the Dow Jones futures (YMH17:CBT), and the Russell 2000 futures (TFH17:ICE) all at, or near, their all time highs, it’s hard to imagine that the markets will not make a run for further new highs. The question is, can the index markets keep going up in 2017, or is there a pull back coming? My gut tells me 2017 is going to be filled with ups and downs, and while the markets maybe going higher right now, I do not think they can keep going. According to Investors Intelligence, the numbers show a high level of bulls, now being above 60%. The last time bullish sentiment was so high was mid 2014.

I am not trying to be a contrarian, but with a full 12 months of trading ahead of us, and knowing that the markets have rallied so much since Trump won, and the fact that he officially takes office on Jan 20th, it would make sense that there could be some selling for a few days before he takes office. If we learned anything about the second half of 2016, it was that major events like Brexit and the election do cause sell offs, but they may also set up major lows.

Yesterday, the S&P 500 futures opened the regular session trading at 2256.25, up 3.50 handles. An early low was made at 2256.00 on the open and then the futures proceeded to trade in a thin-to-win type grind higher for much of the day. The ESH17 finally topped out in the final hour at 2267.25, before settling at 2264.50, still up 11.75 handle, or .50%.

Last Call For 2016

Date Net Change Settlement Volume
Monday Dec 19 +5.00 2260.75 921k
Tuesday Dec 20 +6.25 2267.00 826k
Wednesday Dec 21 -8.75 2258.25 650k
Thursday Dec 22 -0.25 2258.00 832k
Friday Dec 23 +0.75 2258.75 391k
Monday Dec 26 CLOSED
Tuesday Dec 27  +1.00  2260.75  498k
Wednesday Dec 28  -16.00  2244.75   1.00m
Thursday Dec 29  +1.50  2246.25  913k
Friday Dec 30  -12.75  2233.50  1.2m
Tuesday Jan 3 +19.00 2252.50 1.8m
Wednesday Jan 4 +12.00 2264.50 1.4m

While You Were A Sleep

Overnight, stock markets in Asia were mostly higher once again, and following that, the European markets have traded very lightly, with mostly mixed results. The S&P’s opened globex quietly and traded to a 2265.00 high late in the Asian session. Some selling showed up after the Euro open and just printing the low tick of the session down at 2258.75, down 5.50 handles on the day, with volume at 96k as of 6:35 am cst.

BofA Merrill:



Asia and Europe

In Asia, 9 out of 11 markets closed higher (Hang Seng +1.46%), and in Europe 6 out of 11 markets are trading higher this morning (DAX -0.07%). Today’s economic calendar includes the Weekly Bill Settlement, the 52-Week Bill Settlement, Chain Store Sales, Challenger Job-Cut Report, ADP Employment Report, Jobless Claims, Gallup Good Jobs Rate, Bloomberg Consumer Comfort Index, PMI Services Index, ISM Non-Mfg Index, EIA Natural Gas Report, EIA Petroleum Status Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 3-Yr Note Announcement, a 10-Yr Note Announcement, a 30-Yr Bond Announcement, Fed Balance Sheet, and Money Supply.

Our View

I think a lot of people are excited about 2017. A new year and a new president. That said, there is a full 11 3/4 months to go, and within that time, I strongly believe that there will be some major ups and downs. Our view for today is for more of the same. The futures look a little weak this morning, but that doesn’t mean they won’t bounce. Buy the early weakness and sell the rallies. With the jobs number coming tomorrow, the ES could see some selling in front of the number.

Stocks topped OLS ep 2167 exactly, Nasdaq also

We are off to the races.  I know you won’t do it, and who am I, but my insight says, system did sell ep 2167.15 was it?  4942.25 nasd was an old brown XXX’s in chart.  Dow same.  All set up imo. Too many ideas.  Lets get me setup so you guys can drop in.  I think it might offer value, wheat up $1200 3.94. You either buy olives or risk changes dramatically, at least at first, until it break 200 handles fast.

Get me on board because I see no value.

All levels yesterday were good, stay short stocks if you get short, don’t cover till Monday, or 25.00 lower spus 1st time. 1%

Alan Palmer

Market Vitals for Thursday 01-05-2017

Download (PDF, 823KB)

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 +0.21%, Hang Seng +1.46%, Nikkei -0.37%
  • In Europe 6 out of 11 markets are trading higher: CAC +0.03%, DAX -0.07%, FTSE +0.06% at 6:00am ET
  • Fair Value: S&P -5.31, NASDAQ -2.17, Dow -73.61
  • Total Volume: 1.4m ESH and 7.7k SPH traded
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Danny Riley (2085 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.

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