S&P 500 Futures: Last Trading Day of Q3 + 1%

The ‘thrashing’ continued Friday with the S&P 500 futures (ESZ16:CME) closing up +1%. Every day last week the S&P closed up or down sharply. A week ago the (ESZ16:CME) closed at 2158.00 and today, and Friday’s close was at 2160.00. That’s good news for the bulls but there are still a lot of unanswered questions out there.

Friday’s trade was a great example of the mutual funds taking the ball and running with it. The ESZ opened at 2153.25, made an early low at 2150.50, then started moving higher. After Thursday’s sell off, and weak globex session, the ES came to life marking up all 11 sectors in the S&P. With the exception of a few 4 to 5 handle pull backs, it was all straight up. Thursday the ES could not ‘catch a bid,’ and Friday there were no ‘offers.’ I know I talk about this a lot, but the whole week was like the PitBull says… “Water in the bathtub.”

Going into the late part of the day the MiM started showing considerable size to buy. The actual MOC came out around $1.5 billion dollars to buy. However, as we neared the closing minutes, buyer’s dried up above 2165. The index futures dipped hard into the close losing 11 handles from the high. The day was done. After completing the worse historical week of a very bad month, the S&P showed its resiliency, shrugging off bears even as 14 of the last 18 years the last day of Q3 closed lower.

Follow the Money

MrTopStep has said for a long time to “follow the money.” Right now, as traders have shrugged off the seasonal spooky fears, it looks like the money is going back into equities. It’s the same pattern as after the Brexit sell off when the markets caught their breath. The S&P rose as the money flow increased. We are not saying any weakness is over. There is a concern that buyers will dry up on the way up to 2200 again, and we cannot entirely dismiss the historical tendencies of the “spooky” month of October. When it’s all said and done, the bears will have to take over at some point. Up until now, every attempt appears to be a “false start” filled with noise and buying opportunity.

While You Were Sleeping

Overnight equity markets worldwide held up a bid to begin the new quarter as some of the major markets (Shanghai, DAX and others) were closed. The S&P 500 futures traded sideways overnight, making a high at 2164.00 in the Asian session. A low was put in at 2157.75 after European open and is currently trading at 2160.00, down two ticks on the session, with only 80K contracts traded at 6:47 am cst.

In Asia, 8 out of 8 open markets closed higher (Nikkei +0.90%), and in Europe 10 out of 10 open markets are trading higher this morning (FTSE +1.38%). This week’s economic calendar features Friday’s NFP along with 25 other reports, 9 Fed Speakers and 12 U.S. Treasury Bill/Note/Bond events. Today’s economic calendar includes Motor Vehicle Sales, Gallup US Consumer Spending Measure, PMI Manufacturing Index, ISM Mfg Index, Construction Spending, a 4-Week Bill Announcement, a 3-Month Bill Auction, and a 6-Month Bill Auction. Our view, initially we think the ES goes up a bit, sell the early rallies and buy weakness. The mutual funds will have some buying to do on the first few days of the new month and quarter.

tech-levels-10-03-2016

First Trading Day of Q4

Our View: What’s up with these markets? The ES won’t go too far in either direction. Maybe it’s the uncertainty surrounding the presidential election… I just don’t know. A week ago Friday the ESZ closed at 2158.00 and last Friday the ES settled at 2160. Despite a ‘whole lotta shakin,’ the spoos are not going anywhere. This week has another heavy round of economic reports and fed speak.

‘S&P 500 Futures: Big Ups & Big Downs’

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 closed, Hang Seng +1.23%, Nikkei +0.90%
    • In Europe 10 out of 10 open markets are trading higher: CAC +0.17%, DAX closed, FTSE +1.38% at 6:00am ET
    • Fair Value: S&P -6.87, NASDAQ -5.50, Dow -93.50
    • Total Volume: 2.0mil ESZ and 6.2k SPZ traded

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