S&P 500 Futures and Mutual Fund Tuesday

S&P 500 Futures and Mutual Fund Tuesday

The S&P saw some very quiet trading during the abbreviated holiday electronic sessions. That quietness rolled into Tuesday mornings regular trading session. After an early uptick the S&P futures ran the buy stops up to the 2183 area I warned people about. I told the MrTopStep trading forum:

10:02:08 TRADINGDATA2: (driley) my gut tells me we trade off, needs to trap people.

Not too long after that the ES dropped from 2181.75 down to 2175.75, and then down to low of the day at 2173.00. One of the things we think traders need on their radars is how the big investment firms and mutual funds buy stocks on the last and first 3 days of the month. Late in the day the ES ‘back and filled’ above the vwap, and when the MiM (MrTopStep Imbalance Meter) ‘flipped’ from $120 mil to sell to over $450 million to buy, the ES reacted in kind and rallied up to new highs at the 2186 level.

ES 2200

If we have learned anything about the ES it’s that it never does what most people want it to do when they want it. Going into the August options expiration there were a high percentage of traders that believed the S&P futures were going to trade 2200.00, and almost everything we looked at said the same thing. Clearly the ‘crowd’ was thinking higher prices into and after the expiration, but it sold off.

Once everyone turned, the sentiment shifted to more bearish, and the futures started going back up. The ES that had been down 8 of of the last 10 sessions reversed and started moving back up. Those are the mechanics of how the S&P futures works right now. Sell off, get the public bearish, then the institutions get to buy cheap inventory and use the shorts to fuel the markets higher.

We could go over the global news and US economic reports but that’s not why traders come here. I do my best to provide a feeling for what’s going on outside your charts. What’s been going on is the end of the month and first of the month mutual fund buying, and as I always say; if you want to know where the S&P is going, just follow the cash.

Globex : Part I

Overnight Asian markets were mixed to lower, but Europe came online and, as usual, major indices bid higher. The ESU16 maintained one of its quietest ranges in globex and was completely sideways until the European open. Just after the Euro open it found a low of 2182.75 and then bounced to make a 2186.25 high, thus making a 3.5 handle overnight range on volume of 110K at 5:45 am cst.

Nothing on the calendar has been market moving as of late. With the quiet globex session, and light calendar today, MrTopStep thinks we are in store for another grinder. Remember, not every trader returns the day after Labor Day. Sometimes it takes until the end of the week or middle of the month to see where money flows are going.

We are watching the 2186.25 globex high and the Jackson Hole 2186.75 high from two weeks ago. Above that is the 2191 contract high then 2200. To the downside, there is a lot of support today at 2180 down to 2178, and then at 2173 to 2171.

Global Markets & Calendar

In Asia, 6 out of 11 markets closed lower (Nikkei -0.41%), and in Europe 8 out of 11 markets are trading morning higher (DAX +0.28%). Today’s economic calendar includes MBA Mortgage Applications, Gallup U.S. Job Creation Index, Redbook, Esther George Speaks, JOLTS, and Beige Book.

S&P 2200.00 ON TAP

Our View: It was a very good close for the ES and should set up higher prices. After last week’s sell off, the buy stops above 2185 – 2186 have increased in size. If there are no economic surprises today, so it’s my guess we run those stops. Our view is to sell the early rallies and buy weakness. ES 2200 is only 14 handles away. While the S&P maybe going up, so is the risk, and you can add retail investors to the all in list. TD Ameritrade customers saw the biggest one month increase in equity exposure since they started tracking it 5 years ago. This came out today. Not many empty seats left on the bus. https://imx.tdameritrade.com/imx/p/imx-pub

As always, please use protective buy and sell stops when trading futures and options.

MrTopStep’s LIVE Trading Bootcamp starts next week. Sign up here to reserve your spot!

• In Asia 6 out of 11 markets closed lower: Shanghai Comp +0.04%, Hang Seng -0.19%, Nikkei -0.41%
• In Europe 8 out of 11 markets are trading higher: CAC +0.20%, DAX +0.28%, FTSE +0.11% at 6:00am ET
• Fair Value: S&P -1.06, NASDAQ -0.40, Dow -3.87
• Total Volume: 1.6mil ESU and 5.6k SPU traded

[s_static_display]