ES Down 1% This On The Week
I called it, the bears eventually got their way this week. A few days ago I said that after 3 weeks of gains the S&P would trade down 1% on the week, and believe it or not, the ES was down over 1% on the week as of yesterday’s low. I love to day trade, and I know it’s not easy, but after such a big move up, and a ‘major’ reverse in psychology, I figured it was time to turn on the contrarian switch and start fading the crowd.
After Wednesday’s weak close, the ESZ opened yesterday’s regular session at 2201.75, up three handles. The high was made just a tick above the open, and the rest of the day was all about sell programs and sell imbalances. The S&P 500 futures made a series of lower highs and lower lows throughout the session, eventually trading down to 2186.00, more than 27 handles from this week’s high. The market-on-close imbalance (MOC) came in over $600 million to sell, bringing the weekly accumulation to over $4 billion dollars to sell in the last four sessions.
Anything Can Happen…
We said the bears needed to erase the 2200 floor, that was done, then take out the old 2191.50 high, and then target 2186.00. All of these things were done yesterday, now the S&P’s head into NFP looking weak due to first of the month profit taking. Traders have known after the recent Brexit vote and U.S. Presidential election that anything can happen on a population vote, and that has to be in some people’s minds heading into Sunday’s vote in Italy. The reaction shouldn’t be too volatile for the U.S. equity markets, however, with thinner globex trade and algo’s running wild, anything can happen.
Risk Off
Overnight, equity markets around the world were on the weaker side, as Asia and Europe saw risk off heading into the weekend. The S&P 500 futures found resistance at the old 2191.50 high early in globex, and saw a trade down to 2184.25 early after the Euro open, making it just two ticks shy of a 30 handle retracement. Since then the market has traded off the low. The ES is currently trading 2188.00, down four handles on the session, with volume coming in at just 114k as of 6:28 am cst.
In Asia, 9 out of 11 markets closed lower (Shanghai -0.90%), and in Europe 11 out of 11 markets are trading lower this morning (DAX -1.08%). Today’s economic calendar includes the Employment Situation, Lael Brainard Speaks, Daniel Tarullo Speaks, and the Baker-Hughes Rig Count.
Jobs, Jobs, Jobs
Our View: Asia down, Europe down , ES down? Something has to give, and I think initially it’s going to be to the upside. The pryor non-farm payroll came in at 161,000 jobs, and the consensus for this morning is 170,000. The ES ‘double bottomed’ at 2184.25 and is trading 2189.00 last. My gut tells me the ES has already sold off and is going to trade higher in the first part of the day. I am sticking with my short, and if I don’t cover today, I will hold into the Italian referendum. You can take if from there.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed lower: Shanghai Comp -0.90%, Hang Seng -1.37%, Nikkei -0.47%
- In Europe 11 out of 11 markets are trading lower: CAC -1.44%, DAX -1.08%, FTSE -0.93% at 6:00am ET
- Fair Value: S&P -1.17, NASDAQ -0.14, Dow -10.88
- Total Volume: 2.1m ESZ and 4.5k SPZ traded
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