The markets go up, and the markets go down. No one knows for sure where the S&P 500 futures are going, but if there is one sure thing when it comes to trading futures, it’s that the algorithmic and high frequency trading programs rule.
Is trading the S&P really all about retracements, trendlines and moving averages? Or is it about how far these types of programs exploit the movement? There is no going back to how the S&P used to ‘act’, and when it comes to the present day, there really is no way to define how it acts, because it’s an ever changing trading environment. Sure, if you are good at pattern recognition you can see certain patterns developing, but not long after you see it so do the guys that program the algo and hft trading programs. It really is where man meets machine, and it only helps the robots.
Quick Snapshot
After an early push up to the 2344.00 area, the ES sold off and double bottomed at 2336.75, then popped back up above the VWAP and double topped at 2341.00. At exactly 11:00am cst the futures got slammed down to 2330.25 and then rallied back to 2340.00 over the next two hours. That was exactly what I was looking for, but I jumped in too early and got stopped out before the low was in. If I had waited for the European close to get long I would have nailed it. It’s not just about picking the ‘exact’ price, it’s also about timing, and while my idea was right, my timing was off.
Late in the session the ES sold off under the vwap when the early MiM started to show $440 million to sell, but then the futures slowly started heading back up. On the dip From 2336.60 there were 11 separate buys, totaling 8.000 ESM17 contracts, that pushed the futures right back to the 2341.00 area.
While You Were Sleeping
Overnight, stocks markets in Asia were mostly lower, followed by the European markets which are mostly higher this morning. The S&P 500 futures in the opened the overnight session at 2337.75 and made a low at 2336.25. From there the futures rallied and maintained a steady bid up to 2345.00, up 7.75 handles at 4:30 am cst. As of 7:00am, the last print in the ES is 2344.00, up 6.75 handles, with just over 100k contracts traded.
In Asia, 9 out of 11 markets closed lower (Shanghai -0.79%), and in Europe 10 out of 12 markets are trading higher this morning (FTSE +0.33%). Today’s economic calendar includes MBA Mortgage Applications, EIA Petroleum Status Report, Eric Rosengren Speaks, and Beige Book.
Our View
So far this week, much of the risk associated with the political headlines is out of the picture. With a lighter post holiday economic calendar and the April options expiration, the S&P’s have taken something of a ‘thin-to-win’ approach. The S&P was able to make a higher low yesterday, but was unable to push above Monday’s high.
The Wednesday expiration stats show the S&P 500 up 16 and down 11 of the last 27 years. As long as the volume is unimpressive and the news headlines are quiet, we lean to buying the dips looking for a push to 2350 this week. Overall, it still looks like a two sided market, and our call is to sell the early rallies or buy midday weakness.
PitBull: CLM osc 7/17 turns up on a close above 5473, ESM osc -13/-4 turns down on a close below 231188, VIX osc 17/9 turns up on a close above 1801.
Download the April Option Expiration Stats Here
Market Vitals for Wednesday 04-19-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed lower: Shanghai Comp -0.79%, Hang Seng -0.41%, Nikkei +0.07%
- In Europe 10 out of 12 markets are trading higher: CAC +0.40%, DAX +0.33%, FTSE -0.01%
- Fair Value: S&P -3.50, NASDAQ -1.50, Dow -65.50
- Total Volume: 1.4 m ESM and 7.1 k SPM traded
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