When the S&P 500 futures closed weak on Friday, and traded down to 2035.00 Sunday night, the futures could not have looked any worse. By 2:45 CT Monday afternoon that early weakness had been replace with a 33 handle rally, all the way up to 2067.00, up 24.50 points or + 1.14%. As much as traders may want a sell off, the index markets are maintaining their current trading ranges, and we are unsure what the catalyst will be that will change the current structure.
Overnight, the S&P 500 futures were firm early in the Asian session, retesting and exceeding Monday’s high’s by a handle before trading lower after the Euro open. All eight handles of the overnight gains were taken back, and currently sits at 2060.75, down two handles on less than 150K volume at 6:30 am cst. It would appear to be shaping up to be a quiet day, however the calendar today is much more pivotal with CPI and housing starts this morning which could likely set the tone for the day.
In terms of price action, it will be interesting to see if the globex double top holds as sellers are trying to form a pattern of lower highs on some of the longer time frames, but find themselves unable to follow up on any lower momentum. If price travels back to the 2070 area today, it will become the pivotal price of the day, and likely will be faded on first touch. Once exceeded it will open the door for a push to 2080. The globex low area of 2060 (which is currently being traded) and the 2057.00 area of yesterday’s afternoon low becomes an important initial line in the sand for buyers, which seems unlikely to hold at this point. However a break of this area leaves the door open to a full retracement of Monday’s gains, and if this happens, then the door is really left wide open for the remainder of the week and a trade down to the 2026 price would seem like a likely initial target.
In Asia, 9 out of 11 markets closed higher (Shanghai -0.25%), and In Europe, 6 out of 11 open markets are trading higher this morning (DAX -0.08%). Today’s economic calendar includes Consumer Price Index, Housing Starts, Redbook, Industrial Production, E-Commerce Retail Sales, San Francisco Federal Reserve Bank President John Williams and Atlanta Federal Reserve Bank President Dennis Lockhart will speak at a Politico event in Washington DC, and Dallas Federal Reserve Bank President Robert Kaplan is speaking in a moderated Q&A session followed by media availability at a community forum in Midland, Texas.
Our view: From the look of the S&P cash study for the May options expiration the ESM16 looks higher this week. Can it break out of its range is the question though. We still think the ES needs a close above 2083 to keep going up, but who wants to buy into that? Low M&A and the election could continue to create uncertainty for stocks as the markets move into the summer and fall. With oil trading all the way $48.42, and the CLM16 options set to expire today, we think it could be another very volatile day for the energy markets. Our view, after a big up day the ES tends to go sideways to down, we lean to selling the early rallies and buying weakness.
Download all of the May expiration stats here
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed higher: Shanghai Comp -0,25%, Hang Seng +1.18%, Nikkei +1.13%
- In Europe 6 out of 11 open markets are trading higher: CAC -0.01%, DAX -0.08%, FTSE +0.45% at 6:30am CT
- Fair Value: S&P -3.34, NASDAQ -2.35, Dow -42.91
- Total Volume: 1.5mil ESM and 3.0k SPM traded
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