^{(Globex session chart 01.18.2016)}

After staging an intraday reversal on Thursday where the ESH rallied 55 handles from a low of 1871 up to 1927.50 and then closed at 2014, the equity indexes appeared to have possibly put in a short term low. The volume had been the largest of the year in the S&P futures, and on the SPY ETF volume was at it’s highest point since early October, near the beginning of a 10% S&P 500 rally. However, while some of the indicators suggested a low, the market “feel” just didn’t seem to be there. As the world markets opened for Friday’s session fear again prevailed leaving the S&P at 1862 at the cash open, down 52 handles on the day and 65 handles from the prior day’s high.

While the regular session produced a rally trading up to close at 1876.50, “only” down 38 handles on the day, the damage was done as the S&P tested and, in some cases broke, some major technical levels wiping out many months of gains in just 10 trading sessions.

The futures broke the 1861 September retest low and traded fewer than 20 handles from the August 24th panic low. Meanwhile, the cash index traded below both the September retest and the August 24th lows seeing a print of 1857.83, a price that had not been seen since the October 2014 sell off 15 months ago. The SPX also traded less than 10 handles from the 2013 yearly close thus completing a cycle that wiped out two years of gains mostly in just a few session.

January expirations have not been particularly kind as witnessed this year. After last years decline in OPEX week the ESH rallied the following week, however, the price action is more similar to last August when the major indexes sold off hard into OPEX Friday and was followed by the panic selling on the 24th. At this point there is cause for concern. If the equity markets cannot soon find a bottom then the technical damage that we have witnessed may not be soon shaken. This year continues to breed uncertainty in the global markets, particularly with China, and in the U.S. with presidential elections and a Federal Reserve that is anticipated to make more than one rate hike this year.

6 of the first 10 sessions on the year have traded lower, being down a total of 185 handles on Friday’s low, down -9.0%, or down -13.5% from its June 23rd 2134.00 high.

Jan 4th -26.50
Jan 5th +2.75
Jan 6th -25.75
Jan 7th -53.00
Jan 8th – 21.50
Jan 11th +2.75
Jan 12th +10.75
Jan 13th -43.50
Jan 14th +33.00
Jan 15th -29.50

In Asia, 9 out of 11 markets closed lower (Shanghai Comp +0.44%), and in Europe 9 out of 12 markets are trading lower (DAX +0.16%). This week’s economic calendar includes 18 economic reports, 4 Treasury auctions, 6 Treasury bill/note announcements and one weekly bill settlement. Today’s economic calendar includes MLK Day (U.S. markets closed).

Our View: Today is a Globex only session as the exchanges are closed but at 7:45 the overnight volume has been a solid 325,000 as the ESH has traded in a 30 handle range overnight. The low was made at 1859.75 within the first half hour of the session and the high was made at 1890.00 just after 2:00 am CT. The futures are currently trading at 1873.25 down 1.25 handles. As we write, Europe is dragging lower, but with the early futures close today at 12:15 CT, we are looking to remain out of the markets until tomorrow.

‘S&P 500 Futures; 2016 a Sea of Red’

As always, please use protective buy and sell stops when trading futures and options.

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• In Asia 9 out of 11 markets closed lower: Shanghai Comp +0.44%, Hang Seng -1.45%, Nikkei -1.12%
• In Europe 9 of 12 markets are trading lower: CAC -0.21%, DAX -0.27%, FTSE -0.13% at 6:30am CT
• Fair Value: S&P -7.65 NASDAQ -9.48 Dow -90.15
• Total Volume: 3.4 mil ESH and 13.3k SPH

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