True to form, the S&P futures bounced back up during Friday’s trade, sending the S&P to fresh new highs. After an erratic week the ESU16 pushed back into record territory. The day’s trade was highlighted by a very low level volume and $1.4 billion in stock to buy on the closing bell. While the week was overshadowed by earnings reports and Wall Streets weak expectations, the overall earnings reports came in better than expected. While last week was dominated by the earnings, this week will be highlighted by the fed’s rate setting group and the two day FOMC meeting.
This week will be all about the the Fed putting Brexit behind them. It’s a confusing state of affairs for the fed’s rate setting group. After a disastrous June jobs report, the July non-farm payroll numbers jumped to 280,000. With the S&P and Dow now at new all time highs, and the Nasdaq Composite only 3.75% away from its high set in 2000, some fed officials, like Jeffrey Lacker, Williams and George, maybe eager to get back to pushing rated higher. With the strength of the global economy still in question, and the fact that the ECB held off from any further quantitative easing last week the fed despite its will to push rates higher, may have to hold off until later in the year.
Last week was quiet. There was a 19 handle trading range in the S&P 500 futures, it’s tightest weekly range in 18 months, but the volume was still much higher than other week’s where the S&P traded in a 30 handle or less range. This week’s calendar will feature a little more action. Keep an eye out for the end of the month trade, not only in equities, but also global currencies and commodities, which should give at least a small boost to the equity action this week.
Overnight, Asian markets closed marginally higher, while the European indexes held a fair bid throughout much of the morning’s session. The ESU16 made an early, and new all time high during the Asian open at 2172.50, up 5 handles. There was a move back down to 2163.75 going into the European open before trading back to 2171 at 3:30 am cst/ The ES is currently trading at 2167.
2 Day Fed Meeting, BOJ and a Slew of Earnings This Week
In Asia, 8 out of 11 markets closed higher (Nikkei -0.04%), and In Europe 10 out of 12 markets are trading higher this morning (DAX +0.96%). This week’s economic calendar includes 19 separate economic reports, 10 T-bill pr T-bond auctions or announcements, 2 day MOMC meeting, 2 Federal Reserve bank presidents speaking, and the US GDP. Today’s economic calendar includes the Dallas Fed Mfg Survey, a 4-Week Bill Announcement, a 3-Month Bill Auction, a 6-Month Bill Auction, and a 2-Yr Note Auction.
Is S&P 2200.00 on TAP This Week?
Our View: When the earnings expectations were being talked down a few weeks ago we should have known they would not be as bad as they were forecasting. The S&P was already on the upswing and the mutual funds were putting money back to work in stocks. Last night’s trading range was narrow and we don’t expect today to be much larger. Our view is to sell the early rallies and buy weakness. If the ES settles above 2176 I think it could be a quick short to S&P 2200.00. One of the announcers on CNBC mentioned ES 2400.00 this morning, I assure you, stocks will top out long before then.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 8 out of 11 markets closed higher: Shanghai Comp +0.10%, Hang Seng +0.13%, Nikkei -0.04%
- In Europe 10 out of 12 markets are trading higher: CAC +0.76%, DAX +1.06%, FTSE +0.03% at 6:30am ET
- Fair Value: S&P -5.95, NASDAQ -6.91, Dow -77.37
- Total Volume: 1.1m ESU and 3.3k SPU traded
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