Yesterday’s overnight rally in global equity markets helped push the S&P 500 futures higher premarket. However, as the cash markets opened, the price action showed why we call the open the “second part of the trading day.”
The ESZ opened at 2139.00, made a 2139.25 high and then proceeded to sell off throughout the morning as crude oil futures reversed the early session gains. The S&P made a mid morning low of 2129.00, a 10.25 handle move off the highs, then started back higher. The futures made a lower high at 2138.50 midday before the final hour sell programs again took the S&P 500 down to 2130 in the closing minutes of the session, just a handle from the intraday low. The ESZ6 settled the session at 2131.50, up 8.50 handles, or .40%, but closed well off the highs.
Intel (INTL) reported weaker than expected earnings after the close and Yahoo (YHOO) reported earnings that topped analysts expectations. The technology and media company posted third-quarter earnings per share of 20 cents.
Overall it was a quiet day. The (ESZ16:CME) volume on Monday was 1.25 million contracts traded, and yesterdays volume was 1.1 million, with 210,000 contracts coming from globex pre-8:30 CT futures open. That leaves 900,000 contracts traded, 350,000 contracts lower than Monday’s volume. If the numbers are right and 900,00 contracts traded in the day session, and you take away 60% or more, that means there were only 360,000 contracts traded by humans.
Its very hard to gain a feel for this. If the ES goes up one or two days, it sells off for one of two days. That’s great if you’re a retail trader that’s willing to get in and get out, but the sheer grind of the trade wears people down. You think the ES is finally moving in one direction, that it’s going to break out of its mold, but it stops on a dime and reverses the next day. In the end, the day’s overall trade and volume were down, but the ESZ16’s overall tone ‘seemed’ to improve.
Looks Bad? Buyem
Overnight Asian markets were mostly firmer after the Chinese GDP and industrial production came in line with expectations. However, after Europe opened, there was a slight offer that came into the market. The S&P 500 futures traded higher during the Asian session, up to a 2135.50 high from the 2131.50 open, then dipped late in the Asian session. Eventually they found a low of 2126.50 early after the Euro open, and since then have rallied back to 2134.25. Currently the ES is trading two ticks off 2133.75, up 1.75 handles on the overnight session, with volume at 101k at 6:30 am cst.
Barclays on Today’s Fed Speakers
San Francisco Fed President Williams (FOMC non-voter) speaks: Williams will speak on the economy. He strongly supports a near-term rate hike and will likely maintain his hawkish views.
Dallas Fed President Kaplan (FOMC non-voter) speaks: Kaplan has shifted increasingly hawkish in recent speeches. In his view, “we’ve got to be very, very careful” about keeping rates low for a long time. He seems to believe that slow growth is structural and therefore beyond the purview of monetary policy.
New York Fed President Dudley (FOMC voter) speaks: Dudley speaks on the NYC economic history. We expect no monetary policy content.
Bank of America/Merrill Lynch on Today’s Housing Numbers
In Asia, 8 out of 11 markets closed higher (Nikkei +0.21%), and in Europe 9 out of 11 markets are trading lower this morning (DAX -0.11%). Today’s economic reports include MBA Mortgage Applications, Housing Starts, John Williams Speaks, Atlanta Fed Business Inflation Expectations, EIA Petroleum Status Report, Rob Kaplan Speaks, Beige Book, and William Dudley Speaks and earnings from AXP, BBT, EBAY, HAL, KMI, LVS, MAT, MS & more…
Or view: Aside from the China news it was a quiet overnight trading session. The ES volumes have been dropping. I am not 100% sure why, but my guess is people have cut back from the chop over the last several weeks. I think some people got hurt. That said, today is a new day and our view is to sell the early rallies and buy weakness. With all the up a day / down a day trade you probably should be on guard for a down day.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed higher: Shanghai Comp +0.03%, Hang Seng -0.38%, Nikkei +0.21%
- In Europe 9 out of 11 markets are trading lower: CAC -0.02%, DAX -0.11%, FTSE -0.17% at 6:00am ET
- Fair Value: S&P -5.94, NASDAQ -7.12, Dow -86.73
- Total Volume:1.25m ESZ and 2.3k SPZ traded
No responses yet