Globex, the fabled overnight trading session, that has been touted as the ‘best session to trade,’ has been taking a hit. The trading ranges have narrowed and volume has fallen off a cliff. After President Trumps first full week in office, some people are happy that he is fulfilling his campaign promise that it ‘would not be business as usual.’
It wasn’t Halloween, Thanksgiving, Christmas, or even New Years. In fact, it wasn’t a holiday at all! What was it? It was Thursdays nights Globex session, and there was not much to talk about. The higher the S&P 500 futures (ESH17:CME) and Dow Jones futures (YMH17:CBT) go, the less trade there is.
Like many Globex sessions lately, last Thursday night’s 5.75 handle range and 105,000 contracts traded was a great example of what uncertainty looks like. In most, cases when a new president is elected, he sets his agendas for the first 100 days. It’s usually a time of well thought out adjustments. As the people of the United States, and the world, look at President Trump’s ‘list of accomplishment’ in his first 9 days in office, many (some even in his own cabinet) are are starting to wonder if he is making too many snap decisions.
While Mr. Trump has boasted that he had no government experience, his first nine days in office were filled with changes. In his first nine days in office he issued directives on health care, trade, abortion, the environment, immigration, national security, housing, attacked China, restricted travel on many Muslim communities, and left thousands of people stranded across the world.
Many Americans who want Mr. Trump to shake things up are starting to wonder if the unruly process will achieve the goals he has outlined.
Too High To Buy And Too Scared To Sell
Friday’s trade was a carry over from Thursday night. Total volume in the S&P 500 futures (ESH17:CME) was 942,000, 105,000 of that volume came from Globex, knocking Friday’s total day session volume down to 837,000 contracts. The session total trading range was 8.5 handles.
While we have seen the S&P futures go from ‘extremely’ high volume to low volumes, there is definitely something going on under the surface. If there is anything that is absolutely clear, it’s that the public is ‘scared’ and pulling back.
For most of Fridays session the (ESH17:CME) was stuck in a 1 to 2 handle trading range. At one point, I swear there was not a change in price for over 2 minutes. When I was looking at my screens I kept asking the MrTopStep forum if the futures were ‘stuck’ or ‘frozen.’ In all my years on and off the trading floor I have never seen the lack of buying and selling / movement on a non-holiday session.
Trump Suspends US Refugee Admissions Programs For 120 Days, And Indefinitely For Syrian Refugee
On Sunday night the S&P futures (ESH17:CME) dropped 8 handles in reaction to President Trumps order to suspend immigration programs for several Middle Eastern countries for 120 days, and suspend the Syrian program indefinitely. It looks like Trump is making moves that many would consider ‘protectionist’ by going after big trade deals, amping up detentions, and the deportation of unauthorized immigrants.
I have said many times that 2017 is going to be filled with big moves in the stock market. I believe there will be some sharp drops. At first, I didn’t think it would happen until after the first quarter, but with the VIX so low, bullish sentiment so high, and hedge fund exposure at the highest it’s been in over 8 months, I get the feeling the stock market could be susceptible to some quick, sharp, moves to the downside. Are we there yet? I do not think so, but if President Trump continues to press his agendas so quickly without weighing out the repercussions…???
While You Were Sleeping
Overnight, most Asian markets were closed for the Chinese lunar new year, however, all open markets were weaker. Europe followed in the same manner as all markets are currently trading moderately lower.
The S&P’s gapped 7.75 handles lower on the globex open at 2282.00 and, then traded to an early low at 2281.00. From there the ESH traded up to 2285.75 early after the Euro open, and has since pushed back near the open, last trading 2283.00, down six handles on volume of 92k as of 6:18 am cst.
In Asia, 5 out of 5 open markets closed lower (Nikkei -0.51%), and in Europe 11 out of 11 markets are trading lower this morning (DAX -0.95%). This week’s busy economic calendar includes FOMC and 26 other reports, two Fed speakers and 18 U.S. Treasury events and the US jobs report on Friday. Today’s economic calendar includes Personal Income and Outlays, Pending Home Sales Index, Dallas Fed Mfg Survey, a 4-Week Bill Announcement, a 3-Month Bill Auction, and a 6-Month Bill Auction.
Our View
We have a very busy economic schedule this week; 26 economic reports and the jobs number on Friday. I definitely think there could be a pick up in trading this week. The question is simple; has the public become wary about the pace of President Trumps first 9 days in office? My gut say yes to that. Does that mean the ‘high is in?’ I don’t know.
The ES closed at 2289 on Friday, just 11 handles off ES 2300.00, and down 6 1/2 handles as I write this. This is the way I see it. I am a little taken aback, but the immigration stuff could start wider problems, and expose Trumps lack of experience. This would not be good for the markets. Our view is to buy the early weakness and sell the rallies using tight stops.
Market Vitals for Monday 01-30-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/01/Market-Vitals-17.01.30.pdf”]
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 5 out of 5 open markets closed lower: Shanghai Comp closed, Hang Seng closed, Nikkei -0.51%
- In Europe 11 out of 11 markets are trading lower: CAC -0.95%, DAX -0.77%, FTSE -0.68% at 6:00am ET
- Fair Value: S&P -4.33, NASDAQ -3.01, Dow -66.71
- Total Volume: 942k ESH and 4.8k SPH traded
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