The S&P futures huffed and they puffed, but they could not take take out the buy stops above 2106. It’s not very often that the S&P futures will trade above a price so many times without taking out an old high, but for whatever reason and after many attempts the ESM15 failed again to hold the rally and reversed lower. Look, it was the same picture, just a different day.
Since making a contract high of 2117.75 on Feb. 25, the S&P futures retraced nearly 4%, then made a run to all-time highs again but fell short by 10 handles on the March high of 3/23 before falling back and has since made another run with the current April high, again falling 10+ handles short of a new high.
During the time since the all-time high on 2/25 there have been 38 RTH sessions; of these, 14 sessions have traded both sides of 2100 while 20 of the last 38 sessions have traded within 10 handles of the 2100 level. Half of the days since the Feb. 25 high have traded within 20 handles of that contract high. It’s been almost unreal watching the S&P futures over the last 3 weeks. Drop and pop, but unable to hold above S&P 2100.00 and take out the buy stops just below and just above the contract high at 2109.75. How long do I think this type of price action will exist? Well, you will just have to read the “view” below to find out.
In Tuesday’s pit session, the ESM15 made an early high, then sold off down to 2086, and then rallied up to the 2092.50 area before selling off a little and rallying a little going into the 3:15 futures close. With only one economic report and a high level of earnings: BTO, ABT, APH, ALV, AN, BK, BA, KO, DHI, EMC, EVR, GNTX, KNX, LAD, MKTX, MCD, MTG, BABY, NLSN, NS, OC, R, STJ, TEL, TDY, TMO, TUP WAB, WERN, ATC, ALGT, AFOP, T, CTXS, CLB, CLGX, CCI, EBAY, EFX, FFIV, FB, FTK, IGT, MPWR, ORLY, QCOM, RHI, SLM, SCSS, SKX, TXN, TSCO, TYL, and XLNX.
In Asia 6 out of 11 markets closed higher, and in Europe 8 out of 12 markets are trading lower this morning. Today’s economic and earnings calendar includes the MBA mortgage applications, FHFA house price index, existing home sales, EIA petroleum status report and earnings.
Our view: I think there is more anxiety about an upside pop than a drop. Sure, the ES can’t seem to take out the highs, but guess what? One of these morning the spoos are going to go flying thru the highs and scare the hell out of the shorts. It’s just been too easy. Europe will be up and we will get a batch of positive economic reports and some solid earnings and the ES will be off to the races. It’s not a question of if the algos will run the upside stops, it’s when! The S&P cannot keep going above 2100.00 so many times before it rips through the highs. My concern is it may keep going when it does.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed higher: Shanghai Comp. +2.44%, Hang Seng +0.30%, Nikkei +1.13%
- In Europe 8 of 12 markets are trading lower: DAX -0.79%, FTSE -0.63%, MICEX -1.57%, Athens GD.AT +0.31% (at 6:00 am CT)
- Fair value: S&P-6.66, Nasdaq -8.08, Dow -80.98
- Total volume: LOW 1mil ESM and 5k SPM traded
- Economic schedule: MBA mortgage applications, FHFA house price index, existing home sales, EIA petroleum status report.
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