It used to be that September and October were historically feared months for the stock market, but not any more, or at least not this year.
Yesterday, after a simi-weak session in Europe, the S&P 500 futures (ESZ17:CME) sold off down to 2547.25 at 7:00 am CT. On the 8:30 open, the ES 2548.50 rallied up to 2550.00 (1 tick above the vwap), and then retested the Globex low at 2547.25 before shooting up to 2552.25. From there, the ES sold back off down to the vwap at 2550.00, rallied up to a new high at 2553.25, pulled back down to the vwap again, and then rallied back up and double topped at the day’s high at 2553.25.
When I spoke to the PitBull, he asked me if I could believe the price action, and then pointed out that the TRIN was +180, which usually means another ‘leg up’, and he was right. The ES traded up to new highs after we spoke. He want on to talk about his trading rule about a low being made the Thursday or Friday the week before the expiration, and also pointed out that next Monday could see some mid-month rebalancing.
After the 2553.25 high, the ES got hit by a small sell program that pushed it down to 2548.75, this happened as the MiM started showing over $400 million to sell. As the MiM dropped to $574 million to sell, the ES sold off down to 2548.00. At 2:45 the NYSE cash imbalance showed MOC sell $1.1 billion, and the ES sold off down to new lows at 2546.25. It looked like the beginning of a selloff, but then the ES pushed right back up to 2549.25 just after 3:00, and went on to settle at 2549.50.
While You Were Sleeping
Overnight, equity markets in Asia and Europe traded mixed, with a slight bias to the upside, as overseas stock markets look to close out with another weekly gain.
In the U.S., the S&P 500 futures opened last night’s globex session at 2548.00, and printed the overnight low at 2547.00 in the first hour of trading. Despite being held to just a 5.50 handle range, the slow rally since the low was made shows some pretty positive price action going into the 8:30 CT opening bell. As of 7:00am CT, the ES is trading on its highs, and the last print in the is 2552.25, up +2.75 handles.
In Asia, 8 out of 11 markets closed higher (Shanghai +0.16%), and in Europe out of 12 markets are trading higher this morning (FTSE -0.26%).
Today’s economic includes Consumer Price Index (8:30 a.m. ET), Retail Sales (8:30 a.m. ET) Business Inventories (10:00 a.m. ET), Consumer Sentiment (10:00 a.m. ET), Baker-Hughes Rig Count (1:00 p.m. ET); Fedspeak — Eric Rosengren Speaks (8:30 a.m. ET), Charles Evans Speaks (10:25 a.m. ET), Robert Kaplan Speaks (11:30 a.m. ET), Jerome Powell Speaks (1:00 p.m. ET); Earnings — PNC Financial (6:30-6:50 a.m. ET), Bank of America (6:45 a.m. ET), Wells Fargo (8:00 a.m. ET).
Bullish October Option Stats
Our View: The rally that never ends could keep going right into the October options expiration. The stats for today show the S&P up 22/ down 11 of last 33, and next Monday up 25 / down 9 of the last 33 occasions.
Download all of the October expiration stats here
This morning we have a few economic reports to get past, and 4 federal reserve bank presidents speaking. Our view; gap up or gap down is a fade. Sell the early rallies and buy weakness. I’m not sure how long the ES can go without some type of pull back, but I get the feeling it’s close.
Market Vitals for Friday 10-13-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed higher: Shanghai Comp +0.16%, Hang Seng +0.06%, Nikkei +0.96%
- In Europe 8 out of 12 markets are trading higher: CAC +0.07%, DAX +0.13%, FTSE -0.26%
- Fair Value: S&P -2.19, NASDAQ +2.56, Dow -56.08
- Total Volume: 934k ESZ & 557 SPZ traded in the pit
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