S&P 500 Futures: The Mother of All Mutual Fund Monday’s

on September 13, 2016

Black Monday Predictions Tempered

Yesterday was another example of the resilience of the S&P 500 that we have been noting since the March 2009 low. Friday’s close looked panicky as the August, and most of the July, range was wiped out on an awful looking daily bar. This, combined with the bearish seasonals, left many of us thinking that the ESZ6 was going to close below the 2100 level yesterday. However, this is not what the bulls had planned. The S&P 500 futures found a globex low just a tick above the 2100 level and from there built a floor during the globex session. From there the ES rallied into the U.S. cash open at 8:30 am cst.

It was one buy program after another. There were only two five handle pullbacks all day long. Throughout the day, when it looked like it was going to top out and shorts would come in, the buy stops would be run. This left the ESZ6 closing not far from the high of day at the 2151.25 level, up 35.25 handles, or 1.67% on the day. Gold futures closed just slightly lower on the session after a mostly quiet day. The 30 year bond futures closed unchanged. Crude oil futures came roaring back after being down $1.16 to $44.72, back to positive territory at $46.51, before closing at $46.06, up 18 ticks on the day.

The real story, aside from equities, was the CBOE’s volatility index (VIX) as well as Fed talk. The VIX opened at $20.51 and made an early high before closing at $15.16, a $5.25 turnaround from it’s high. It was noted by Pension Partners that the single intraday turnaround in the VIX was the second largest in history. Just when it seemed like a crack in the wall, the Fed’s Brainard showed up with dovish comments. This helped equities rally, dropped the likelihood of a September rate hike to below 20%, and left the December odds at 50/50.

The price action was tremendously interesting yesterday. It was reasonable to look for a rally to short, but while the rally came, the short did not. The price action had the same feeling as the 1981 responsive low after Brexit when the S&P ignored all the noise and just ran buy stops. Today’s “turnaround Tuesday” looks to be the bears last hope of really making noise. They still have the chance to push it back today and resume the downtrend, but I just don’t know how much they have left. I don’t think the price action is going to settle back into 10 handle daily ranges soon. There should be some 20-30 handle days left this week, and if bulls have created a floor at 2100, and the day’s volume looks like a reversal type day, then 2200 will be in reach quickly… Then 2250.

Overnight Price Action & Today’s Calendar

Overnight global equities markets were mostly mixed with modest results after Monday’s rally in the U.S. The fact that the rest of the world didn’t participate in the follow up rally from the S&P is telling. Overnight the ESZ6 again went moderately offered throughout the globex session, inching to a 2135.50 low, down 16 handles. The ES currently sits at 2138.00 on volume of 312K at 6:30 am cst. This day will be a ‘jump ball’ heading into this mornings cash open. Bears need a close below 2125 and bulls need to at least doji today.

In Asia, 8 out of 11 markets closed lower (Shanghai Comp +0.05%), and in Europe 8 out of 11 markets are trading lower this morning (DAX +0.53%). Today’s economic calendar includes NFIB Small Business Optimism Index, Redbook, a 4-Week Bill Auction, a 52-Week Bill Auction, a 30-Yr Bond Auction, and Treasury Budget.

Up A Day / Down Day / During the SEPT Quad Witch

Our View: It’s 7:15 am cst and the ESZ6 is trading at 2138.50, three handles off the lows. After a big up day it’s normal to see a 10 or 15 handle dip. Bulls have to keep it at that, and push the cash into equities early this morning, or risk sliding into some sell stops. This market can certainly go higher, but we likely won’t see another 25+ handle up day again now that the futures are back at the chop area from July/August. Our call is to sell the early rallies and buy late weakness.
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MrTopStep BootCamp September 2016

I delayed the MrTopStep BootCamp for one week because with the markets moving so much we wanted to extend the offer. That said, this bootcamp is going to offer new talent on the trading and technology side. Dave Wienke from POINT.786 is on the schedule a few times to go over his technical service and how it can help your trading. Also, Anthony Stavros from CQG will be demonstrating the platform and going over the newest product releases. It’s an exciting time at MrTopStep, and with volatility picking up, the September quad witch, and the end of the 3rd quarter just around the corner, there could be no better time to sign up. Below is the full week schedule of the boot camp. I hope to see you in there next Monday.

Thanks,
Danny ‘DBOY’ Riley

September 19, 2016 – September 23rd, 2016

The MrTopStep BootCamp in September 2016 is a great forum to learn, trade, and share with the Pros of MrTopStep. All are welcome, and our goal is to share and guide how we succeed in navigating and trading the markets.

The Bootcamp includes full access to the following:

IM Pro trading room
- We’ll teach you how to use all of the great features in the room
- How to send a message
- How to private IM
- How to filter messages
- How to alter the room layout
- How to use audio
- The difference between screen share and live charts
MiM
- What is an order imbalance?
- How do we get them?
- What is difference between dollar imbalance and symbol imbalance?
- What is a large imbalance?
- How does MrTopStep use the MiM to trade, and how can I use the MiM effectively?

September 19

10am: Daily intro with Danny Riley and Marlin Cobb

10:30am: Room walk through with Marlin Cobb