Last Friday’s trading range was 12.75 handles on 1.5 million volume. Mondays range was 8.75 handles with volume of 1.1 million. Tuesdays range was 21.25 and volume was 1.5 million while Wednesday’s range of 11.75 handles was accompanied with 1.4 million volume. Thursday’s range was 7.5 handles on volume of 900k What does this spell for the markets and traders? MrTopStep say this all spells one thing and one thing only; thin to win. Over my 38 years on the trading floor we learned that traders tend to cut back before the holidays, and that’s exactly what we have been seeing all week, narrow ranges and low volumes has been the call of the day.
Where Have All The Traders Gone
Yesterday’s trade was pretty much like Wednesday’s trade, and Wednesdays trade was pretty much like Tuesday. Despite six IPOs the S&P futures (ESM16:CME) were stuck in a narrow trading range. At 3:00 the ESM16 was trading 2089.00, basically unchanged, total volume was only 815,000 contracts (175,000 of that volume came from Globex). Going into today’s trade we expect for it to be like the rest of the week and likely more so.
Overnight, worldwide equity markets continued to hold their modest bid, and the S&P 500 futures traded in a 2088-92 range on just under 100K volume at 6:45 am cst. Later this morning the calendar will feature the final Q1 GDP figures, and unless there is something severely outside the expectations, we expect to go into the cash open with a very slow trade as traders have already taken leave or will take leave after the European index close. Yesterday’s volume was the second lowest of the year, and today may actually be the lowest volume and possibly the tightest range of the year. Heading into the afternoon Fed Chair Yellen speaks at Harvard while accepting the Radcliffe Award. With Yellen again scheduled to speak at a more appropriate venue on June 6th, she will likely avoid giving any monetary policy clues today. Michael Gapen, chief U.S. economist at Barclays Investment Bank, said this week that “We don’t think it’s the right venue,” for Yellen to make any significant statements. He then went on to say that “I would be surprised if she made comments.” According to Greg Daco, lead U.S. economist at Oxford Economics; “Everyone is focused on that June 6 speech. She probably will wait until then to give a better indication of where the Fed is headed.”
In Asia, 10 out of 11 markets closed higher (Shanghai -0.05%), and In Europe, 7 out of 11 markets are trading higher this morning (DAX+0.16%). Today’s economic calendar includes GDP, Corporate Profits, Consumer Sentiment, Baker-Hughes Rig Count, and Janet Yellen Speaks.
Our View: After yesterday traded inside of Wednesday’s RTH 11.75 handle range, and globex being mostly stuck in a two handle 2090-92 range, volume just printed 100K and GDP is coming up. There are likely better things to be done today than trade. Yesterday you could buy 2086 and sell 2088 all day, there may be a trade like that today. MrTopStep’s expectation is for the ESM to trade within 5 handles of the open. Could it thin to win up to 2100? Sure, but it would take a lot at this point. The 2088 level was a good area to lean on last night, good support there and 2086. Resistance at 2092, 2095 and 2100.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 10 out of 11 markets closed higher: Shanghai Comp -0.05%, Hang Seng +0.88%, Nikkei +0.37%
- In Europe 7 out of 11 markets are trading higher: CAC +0.01%, DAX +0.16%, FTSE +0.02% at 6:30am CT
- Fair Value: S&P -2.04, NASDAQ -0, Dow -26.00
- Total Volume: 968K ESM and 4.4k SPM traded
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