Dow and S&P 500 hit fresh records:
Sometimes the S&P 500 goes up, and sometime the S&P 500 goes down. Two weeks ago, when the Nasdaq comp. started selling off, the money was moved to the S&P, Dow, Russell and Midcaps. There was a big rotation, and like always, the ‘bears’ were calling for lower prices. FAANG was dead, and so were the markets, but that’s not what happened. With the S&P up 250% in 8 years, or since its March 6, 2009 low, it’s hard to believe that the markets can keep going up.
There is always going to be a reason to sell / get short the S&P, but if you look at it correctly, and you follow the overall price action, it tells a totally different story. I am not saying that the S&P won’t sell off in July or August or September, it very well could. What I am saying is that until there is a structural shift in the overall price action taking place, and the dips and rips will continue.
Mondays trade started with the S&P 500 futures (ESU17:CME) trading up to the 2440.00 area on total volume of 165,000 contracts. After the open, the ES pulled back to 2438.25, and in came several buy programs that were feeding off the buy stops above the market. Before the ES started to really take off, I posted this in the MrTopStep forum:
09:56:20 TRADINGDATA2: (driley) above 2449.70 they go right to 2454-56
Over the next 10 minutes the ES traded up to 2447.75, pulled back a few handles, and then traded up to a new high at 2450.25 at 9:36 CT. After that, the futures pulled back to 2444.50 at 10:30, and then pushed into a new daily high at 2451.00 a few minutes before 1:00, before pulling back to 2445.50.
Nasdaq Leads the Charge
Mondays always start the week out slow. The NQ sold off from 5782.50 down to 5759.50 at 2:00pm, then started to go back up. The MiM came out showing $160 million to buy early on, and the actual imbalance came out a net buy of $379 million. The ES made a new high by 3 ticks at 2451.50, and the NQ fell short of making a new high by 1 point. Both markets sold off going into the 3:15 futures close, with the ES pulling back down to 2447.00, and the NQ dropping to 5764.75.
In the end it was a good day for the index markets, the S&P 500 futures (ESU17:CME) close up 16.50 handles, or +0.73%, the Dow Jones futures (YMU17:CBT) closed up 128 points, or +0.63%, and the Nasdaq 100 futures (NQU17:CME) closed up 82 points or +1.49% percent. The Nasdaq Composite is 1.3% off its high, but Monday’s 1.4% gain was its largest single-day increase since Nov. 8.
Oil Splashes Lower
Crude oil took another hit yesterday. After ‘double topping’ at 45.26 the futures (CLQ17:NYMEX) took out its old low at 44.44, and poured lower down to 44.32, down -1.4% on the day. According to Donald Morton, senior vice president at Herbert J. Sims & Co. and head trader of the energy desk, oil prices were pulled down by falling prices for gasoline and diesel, as well as pressure ahead of Tuesday’s expiration of the July futures contract. Over the last several weeks, the inventory numbers have been disappointing as U.S. inventories continue to rise, despite OPEC’s continued push to cut oil production.
While You Were Sleeping
Overnight, equity markets in Asia traded mostly lower, led by the JSX COMP, which closed down -0.87%. Meanwhile, in Europe, major equity indices are currently trading mixed, with a slight bias to the upside. In the U.S., the S&P 500 futures had a quiet night, and were held to just a 4 handle range. The ESU opened the globex session at 2447.75, and printed the early low of 2447.50 almost immediately. From there, the futures drifted higher for most of the Asian session, and printed a high of 2451.00 just before 9:00pm CT. Since then, the futures have slowly traded lower, and as of 6:30am CT, the last print in the ES is 2447.25, down -0.25 handles, with 87k contracts traded.
In Asia, 8 out of 11 markets closed lower (Shanghai -0.13%), and in Europe 7 out of 12 markets are trading higher this morning (FTSE +0.08%). Today’s economic calendar includes Stanley Fischer Speaking, Eric Rosengren Speaks, Current Account, Redbook, a 4-Week Bill Auction, a 52-Week Bill Auction, and Robert Kaplan Speaks.
Our View
Well the week after the June quad witch is supposed to be down 1.1%, but that is not how Monday started the week. Many times after the S&P makes a new high, it will start to pull back and get people short again. When it does this more buy stops get built up. I am not saying that yesterday’s high is going to set up a sell off / pull back, but it is possible, and with the weak stats I think the bulls need to be careful not to get ahead of the recent gains.
Our view is that we could see a two way trade today. One of MrTopStep trading rules is that the ES tends to go sideways to lower after a big push up. We lean to selling the early rallies and buying weakness, keeping in mind how far the ES has gone, and remembering our trading rule.
PitBull: CLQ osc -20/-20 turns down on a close below 4287; ESU osc 6/16 turns down on a close below 2430.53; VIX osc -1/-4 turns up on a close above 1135.
Market Vitals for Tuesday 06-20-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/06/Market-Vitals-17.06.20.pdf”]
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed lower: Shanghai Comp -0.13%, Hang Seng -0.31%, Nikkei +0.81%
- In Europe 7 out of 12 markets are trading higher: CAC +0.21%, DAX +0.21%, FTSE +0.08%
- Fair Value: S&P -2.53, NASDAQ +5.80, Dow -49.17
- Total Volume: 1.2mil ESU, and 768 SPU traded
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