The S&P 500 and U.S. Treasury bond futures fell after the ECB decided against adding any new stimulus measures, or expanding existing ones, and kept its interest rates unchanged. Neither of the markets liked that!
The markets didn’t like what the ECB’s Mario Draghi had to say. The DAX was already weak, but as the European markets fell, so did the ES futures. After selling off 2170.25 (vs the ESZ16) the ES bounced back up to the 2175.00 area and went on to make a new low by three ticks at 2169.25. There was a bounce up to 2176.25, some back and filling above the vwap, and then a sell off in the early afternoon.
MrTopStep put this out before the low was made: IMPRO:Dboy: (9:39:24 AM): ‘Im bidding 2169.50 and 2167.50 small.’ After that the futures popped back up 2176.25. There was a slight pull back and then a new daily high was made at 2177.25. The ES then proceeded to trade down to 2171.00 12:45 CT.
Overall trade and volume did pick up during the early sell off, but after the bounce the futures went quiet, while crude oil futures (CLV16:NYM) were all over the place again. Because of the shortened holiday week the natural gas and crude numbers came out showing a decrease in supply when the expectation was for an increase of builds. The CL ripped higher, pulled back a little, then ripped higher again. On Wednesday CL futures closed up +2.9%, and yesterday the CLV was up 4%, when U.S. government data showed the largest decline in stockpiles on record.
The S&P rallied late in the day when the MrTopStep MiM showed an early number of over $500 million to buy. From there the MiM built up to $750 million to buy, and then dropped off to $350 mil to buy, and the ES sold off from the 2175 area down to the 2170.00s area in the final minutes of the session. In the end, despite the drop, the S&P futures (ESZ16:CME) stayed in a narrow trading range for a few hours before moving back up and down going into the close. The other casualty to the ECB’s inactions were the bond futures, which sank when the S&P fell.
MrTopStep BootCamp: 4 Days and Counting
I think most of the traders that know me know I don’t do the ‘hard push,’ and I don’t make promises about all my trades being winners, nor do I do that for anyone in the MrTopStep forum. We all know what the odds are. On an individual trading basis, let’s face it, most people lose. I admit that not all my trades make money, but I also have learned a lot about what William Blount, TopNotch, Chistock, Dave Wienke, and all the other traders in the forum think. We have always said that MrTopStep is a ‘collective’ of traders all working for the same cause; make a little money and don’t get killed in the process.
Just like the trading floor, as things have evolved, so has my feel for the room and for what the other traders are thinking and what they are trading. When all the ‘flow’ is moving I constantly look for what other traders are saying and how it matches up with the levels I am looking at. It has really helped me make better trading judgments and slowed my trading down to a more profitable setting.
Risk Off
Overnight, global equity markets traded with a modest “risk off tone.” The S&P 500 futures followed suit after trading sideways during the Asian session, making a 2171.75 session high, before trading down to 2166.75 not long after the Euro open. Currently the ES is sitting at 2159, down 12 handles, at 7:30 am cst.
Today, there is still a ton of roll volume to be conducted in the S&P’s, and the economic calendar is virtually non existent. Yesterday was a quiet day, especially after the early low, and with the Fed meeting, mid month rebalancing, and September Quad Witch next week, it would not be surprising for desks to be empty today. If 2166, this week’s ESZ low, fails then the target becomes 2161 from pre NFP on Friday. 2161 begins a strong support zone that is likely to be too much for the market to take out today.
In Asia, 9 out of 11 markets closed lower (Shanghai Comp -0.55%), and in Europe 9 out of 11 markets are trading lower this morning (DAX -0.26%). Today’s economic calendar includes Eric Rosengren Speaking and the Baker-Hughes Rig Count.
Our View: Stay on your toes. The wicked September Quad Witch is upon us, and it’s not always good. The stats, with the exception of today, are so-so next week.
Download all of the September Quad Witch stats here.
As always, please use protective buy and sell stops when trading futures and options.
MTS LIVE Trading Bootcamp starts next week. Sign up here to reserve your spot!
- In Asia 7 out of 11 markets closed higher: Shanghai Comp +0.13%, Hang Seng +0.75%, Nikkei -0.48%
- In Europe 7 out of 11 markets are trading lower: CAC -0.02%, DAX -0.16%, FTSE +0.23% at 6:00am ET
- Fair Value for Dec: S&P -7.91, NASDAQ -5.64, Dow -88.65
- Total Volume: 1.5mil ESU and 6.6k SPU traded
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