There are a lot of ways to look at the markets. You can be an optimist, a pessimist, or even a contrarian. I am always an optimist / bull market guy, but I have to admit, I have recently been a pessimist and a contrarian, and to tell the truth, neither worked.
When the MrTopStep MiM continued to show more MOC buys Thursday, the S&P 500 futures (ESH17:CME) reacted in kind, they rallied 13 handle off the late day low and then another 12 handles in globex.
One of the things the PitBull taught me years ago was that when you see a big push before an important number that ‘they are showing you their hand’. Meaning that the buyers that stepped in were buying for a reason; a higher than expected February jobs report. I said I thought the job’s report would come in on the high end, but I have to be honest, I didn’t expect the (ESM17:CME) to take more than half its 5 day loss back in less than 20 hours.
Well, that is how this game is played. The computers, high frequency and algorithmic trading, stretch the market out further than what used to be considered a ‘normal move’. It’s all part of the new world trading order where humans only make up 30% of the volume and the computers make up 70%.
On Friday, the ESM17 rallied to 2376.25 on Globex, but opened at 2373.50 on the 8:30 futures open. After the open the ESM sold off down to 2367.75, and then bounced back to the opening range where it found resistance. Around 12:00 CT (or after the European close) the ESM got hit by a sell program that pushed the futures down to a new low at 2359.00. At the time I thought the ES was stretched out on the downside. Like I said above, everything we do is part of the new world trading order. I tried to time my buys, but never got the ‘Riley Retest’ I was looking for.
IMPRO:Dboy:(1:21:26 PM) : I think the ES has made its early low
IMPRO:Dboy:(1:33:19 PM) : I’m up a grand on the week and I only traded a few times. I want to buy the dip because i think the guys with the better seats will show but I don’t want to give any money back
IMPRO:Dboy:(1:33:26 PM) : maybe just do a 1 lot
IMPRO:Dboy:(1:37:21 PM) : bidding 2360.50
IMPRO:Dboy:(1:39:25 PM) : using a 3 buck stp…
IMPRO:Dboy:(1:47:28 PM) : since the low there has been 12 buys for a total of 5.1k buys
IMPRO:Dboy:(1:47:49 PM) : I think we pop
I never got filled on the trade and the ES traded up to 2370, completing a 10 handle rule move. The futures looked strong going into the close and settled the day at 2368.25, up 5 handles.
While You Were Sleeping
Overnight, Asian equity markets saw a solid rally as 10 out of 11 markets closed higher. Europe followed suit with all but two markets trading minimally higher. The S&P’s have been in a 4.5 handle range for the globex session, making a high of 2369.25 on the open, and the low of 2364.75 an hour later.
In Asia, 10 out of 11 markets closed higher (Shanghai +0.76%), and in Europe 9 out of 11 markets are trading higher this morning (DAX +0.12%). This week there are a total of 22 economic reports, 6 T-bill or T-bond auctions or announcements, the Federal Reserve’s 2 day meeting and rate decision, and the March Quadruple Witching expiration. Today’s economic calendar includes Labor Market Conditions Index, a 4-Week Bill Announcement, a 3-Month Bill Auction, and a 6-Month Bill Auction.
Mixed Stats Ahead
Our View: The Monday of the week of the March Quad Witching is firm. The Dow is up 22 of the last 29 occasions. The Friday of the March Quad witch (St. Patrick’s Day) is mixed the last 28 years, but down 5 of the last 8 occasions, and the week after has the Dow down 19 of the last 29, and down 4 of the last 5. Additionally, the S&P tends to see mid-month strength and late month weakness.
March has been taking some quarter end hits. The last 3 or 4 trading days of the month the Dow has been a net loser, down 17 of the last 27 years. Based on how the futures closed, I lean to seeing higher prices. Our view remains the same; you can sell the early rally and buy weakness, or just buy weakness before or after the European close. With the 2 day fed meeting upon us, the markets should remain in quiet mode until Tuesday afternoon.
YTD equity flows:
Inflows of $106.9BN to ETF’s.
Outflows of $24.5BN from active investors.
Market Vitals for Monday 03-13-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/03/Market-Vitals-17.03.13.pdf”]
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 +0.76%, Hang Seng +1.11%, Nikkei +0.15%
- In Europe 9 out of 11 markets are trading higher: CAC +0.08% DAX +0.12%, FTSE +0.17% at 6:00am ET
- Fair Value (Jun): S&P -2.59 , NASDAQ +4.54 , Dow -40.54
- Total Volume: 1.36k SPH, 1.85 mil ESH, 13.8k SPM, 11.9k SPM traded
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