The S&P blender has been doing a number on the hedgers / short sellers. Sure there were a ‘few’ small selloffs, but all that did was add fuel to the fire. The large institutions thought that there was potential for a stock market correction before, or just after, Trump took office. They were banking on a selloff, this was evident by the large VIX call options and SPY put option plays last week. What they got was a bunch of ‘back and fill’ price action and then a big rip higher. As it became clear that the markets were shrugging off most, if not all, the Trump news, the hedges became lifted helping push, what was a sluggish S&P, higher.
The ESH17:CME once again opened yesterday’s regular session higher at 2286.50, up 12 handles, and from there never really looked back. The trend day buy programs once again kept a steady finger on the bid and pushed the futures up to 2295.00 late in the day, up 20.50 handles, in what exceeded the price action from Tuesday.
ES 2300 Meets T+3
It’s 8:30 pm cst and the S&P’s are at it again tonight making another high up to 2297.75. It looks like a march right up to 2300 and there’s nothing in its way. Many of us were looking for a trade back to 2277 yesterday morning to try to get long after missing Tuesday’s breakout, but the market was stingy and would give us no opportunity.
Today marks T+3, when equity positions begin to be liquidated for the month end. Considering the personality of January thus far, it’s hard to indicate how the month end trade will occur, given the quiet trade after the first two days of the month until Tuesday. The economic calendar is busy and 2300 is dock. Sure, there could be some dips but it’s looking like any weakness will be buy opportunities.
While You Were Sleeping
Overnight markets in Asia rallied once again on the heels of Wall Street’s second day of new all time highs. Europe opened up with just about all markets trading higher, albeit a more modest bid than Asia. The S&P futures opened globex at 2293.75 and bid higher early in the session making a high of 2299.50 late in the Asian session and since has traded lower down to 2294.00. Last print in the ES is 2294.75 at 6:31 am cst, up three ticks, on volume of 108k.
In Asia, 8 out of 8 open markets closed higher (Nikkei +1.81%), and in Europe 9 out of 11 markets are trading higher this morning (DAX +0.49%). Today’s economic calendar includes the Weekly Bill Settlement, International Trade in Goods, Jobless Claims, Chicago Fed National Activity Index, Bloomberg Consumer Comfort Index, PMI Services Flash, New Home Sales, Leading Indicators, EIA Natural Gas Report, Kansas City Fed Manufacturing Index, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 52-Week Bill Announcement, a 7-Yr Note Auction, Fed Balance Sheet and Money Supply.
Today’s Calendar Preview from Barclays & BofA/ML
Barclays
BofA/ML
Our View
I think we are getting close to a high. It may not last, but I think the ES is getting ready to pull back. Today we have the largest economic schedule of the week. Our view is to sell the rallies with tight buy stops.
Market Vitals for Thursday 01-26-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 8 open markets closed higher : Shanghai Comp +0.31%, Hang Seng +1.41%, Nikkei +1.81%
- In Europe 9 out of 11 markets are trading higher: CAC +0.06%, DAX +0.49%, FTSE +0.19% at 6:00am ET
- Fair Value: S&P -4.53 , NASDAQ -3.33 , Dow -66.63
- Total Volume: 1.38m ESH and 5.0k SPH traded
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