After the S&P 500 futures opened at 2136.50, sell programs took the futures down to 2132.25, back into Tuesday’s range. As we wrote in yesterday’s Opening Print, “look bad? Buyem!” came into play as buy programs ran upside stops throughout the morning and into early afternoon. There was a rally up to 2142.50, a 10 handle bounce, before selling dried up in the resistance area and the ESZ drifted lower into the cash close. The futures traded down to 2137.50, just a handle above the open, before settling the day at 2138.00, up 7.25 handles or .34%, as the market-on-close imbalance came in at $500 million to the buy side.
It’s clear that the positive overall expiration stats are at work, as October has failed to provide the “spooky” feel (at this point). After the mid month rebalancing, and now the final presidential debate, the markets are starting to breathe a sigh of relief. Expectations that Hillary Clinton will be the next president of the United States have been set. The U.S. Federal Reserve will raise interest rates in December as the CME’s Fed Fund Rate Futures are now suggesting a 70% probability of a hike at years end.
From Stock Trader’s Almanac
For all the heated discussion, debate, worrying, slicing and dicing of numbers, the actual presidential election outcome appears to have little bearing on S&P 500 performance in November and December. Since 1944 election-year November’s have been up 55.6% of the time with an average gain of 0.6% and election-year December’s have been up 83.3% of the time with an average 1.4% advance. The two-month combo of November and December is collectively up 72.2% of the time with an average gain of 2.0%. Regardless who wins, history still favors a typical year end rally.
While You Were Asleep
Overnight global equity markets were mixed ahead of the ECB’s announcement. Most of the Asian markets were lower, with the exception of the NIkkei, which was sharply higher. Europe traded mixed with a slight advantage to buyers. The S&P traded down to 2136.25 early in the globex session, before going bid into the Tokyo session and the presidential debate, trading up to 2144.50. The ES went offered late in the Asian session and into the Euro open, trading back to 2138.00, before bouncing back to 2141.25. Currently the futures are trading at 2140.25, up 2.25 handles, with total volume at just 86k at 6:30 am cst, just a few minutes ahead of the ECB announcement.
In Asia, 6 out of 11 markets closed lower (Nikkei +1.39%), and in Europe 7 out of 11 markets are trading higher this morning (DAX +0.23%). Today’s economic reports includes the Weekly Bill Settlement, Jobless Claims, Philadelphia Fed Business Outlook Survey, William Dudley Speaks, Bloomberg Consumer Comfort Index, Existing Home Sales, Leading Indicators, EIA Natural Gas Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 2-Yr FRN Note Announcement, a 2-Yr Note Announcement, a 5-Yr Note Announcement, a 7-Yr Note Announcement, a 30-Yr TIPS Auction, a Fed Balance Sheet, a Money Supply, and William Dudley Speaks.
Our View: The overnight volume is very light, but the ECB release and press conference will add some fuel in the premarket trade. There is a decent calendar today in cash hours. The Thursday of expiration week is up 20 of the last 32 years, and with bears unable to take this market down, it looks like the algos are going to start chipping away at buy stops up to 2150. Our call is to sell the early strength and buy the late morning weakness.
S&P 500 Futures: Dysfunction Junction
- In Asia 6 out of 11 markets closed lower: Shanghai Comp -0.01%, Hang Seng +0.30%, Nikkei +1.39%
- In Europe 7 out of 11 markets are trading higher: CAC +0.25%, DAX +0.23%, FTSE +0.01% at 6:00am ET
- Fair Value: S&P -5.68, NASDAQ -6.75, Dow -80.67
- Total Volume: 950k ESZ and 2.3k SPZ traded
No responses yet