It looked like the bears were going to get their way again. The S&P and Nasdaq futures that sold off hard midday Thursday, and then rallied late in the afternoon, sold off again during Thursday’s overnight Globex session.
The S&P 500 futures (ESU17:CME) traded 2466.50 on Fridays 8:30 futures open, sold off down to an early low at 2461.50 just after 10:00 CT, and then slowly rallied up to the 2468.00 area. Despite the spike in volatility from Thursday’s sharp selloff, Friday’s trade came at a much slower pace. After the early low both the ES and NQ ground high in very slow fashion.
After making its early high at 2468.00, the ES pulled back to 1 tick above the vwap at 2465.75 at 12:45, and then rallied up to a new high at 2469.00 around 2:15. The Nasdaq 100 futures (NQU17:CME) made its early high at 5918.50 at 11: 45, made several lower highs, and late in the day got hit by a small downside stop run that pulled the future back to 5901.50. Both futures started to uptick when the MiM opened up showing $140 million to buy, then $170 million to buy. Despite the slow day, the ES managed to trade over 1 million contracts.
The Dow posted a gain for the day, and the week, while a fall in technology shares contributed to declines in the S&P 500 and Nasdaq Composite. The tech sector of the S&P closed down 0.1% Friday, extending Thursdays declines, and posted a weekly decline of -0.60%. Year to date the sector remains up 22%.
In the end the S&P 500 futures (ESU17:CME) settled at 2470.25, down -1.75 handles, or -0.07%, the Dow Jones futures (YMU17:CBT) settled at 21775, up +32 points, or +0.14%, and the Nasdaq 100 futures (NQU17:CME) settled at 5910.25, up +0.75 points, or +0.01%.
There are a lot of nervous investors out there, and as the markets move into August, we do not think that is going to change much. For now we think the range in the S&P futures is 2450 to 2485, and still has an upward bias, but if the Nasdaq falls hard, that idea could change.
While You Were Sleeping
Overnight, equity markets in Asia traded mostly higher, led by the Hang Seng Index, which closed up +1.28%. Meanwhile, in Europe, all markets are currently trading higher, with the exception of the OMX Stockholm 30 Index, which is only down -0.08% this morning.
In the U.S., the S&P 500 futures opened last nights globex session at 2470.50, made a low of 2466.25 at 7:00pm CT, and then drifted sideways until 2:00am. As Asian markets were closing, and European markets were opening, the ES rallied to a new overnight high at 2474.74, extending the overnight range to 8.5 handles. As of 6:30am CT, the last print in the ESU is 2472.25, +2.50 handles, with 120k contracts traded.
In Asia, 7 out of 11 markets closed higher (Shanghai +0.64%), and in Europe 11 out of 12 markets are trading higher this morning (FTSE +0.24%). This week’s economic calendar consists of 31 reports, 16 U.S. Treasury auctions and announcements, and 2 Fed speakers. Today’s economic calendar includes a 2-Yr FRN Note Settlement, a 2-Yr Note Settlement, a 5-Yr Note Settlement, a 7-Yr Note Settlement, a 10-Yr TIPS Settlement, Chicago PMI, Pending Home Sales Index, Dallas Fed Mfg Survey, a 4-Week Bill Announcement, a 3-Month Bill Auction, a 6-Month Bill Auction, and Farm Prices.
Nothing Goes Up Forever
Our View: According to the Stock Trader’s Almanac, the last trading day of July (today) has the Nasdaq down 13 of the last 19 occasions. The first trading day of August also has the Dow down 13 of the last 19. The almanac also says the first 9 trading days of August are historically weak.
We still lean to higher prices, and see a move 2485-2500 in the short run, but there are a lot of moving parts. Our view is to remain vigilant about a let down, while still thinking higher prices. Mondays have not been all that good lately, but it is that last trading day of July. You can take it from there.
Market Vitals for Monday 07-31-2017
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As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed higher: Shanghai Comp +0.64%, Hang Seng +1.28%, Nikkei -0.17%
- In Europe 11 out of 12 markets are trading higher: CAC +0.17%, DAX +0.28%, FTSE +0.24%
- Fair Value: S&P -3.00, NASDAQ -1.06, Dow -56.06
- Total Volume: 1.1mil ESU, and 400 SPU traded in the pit
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