There are times when the S&P 500 futures go up, and there are times when it goes down. The best 6 months for stocks begins in November and is a bullish period. We all know the old stock traders adage about ‘selling in May and walking away,’ but before that can happen the S&P will have to get past all the new money moving into stocks as the second quarter begins.
As I said yesterday in the ‘view’ section; I think there is still some unfinished business on the downside, and that I thought people were nervous about how much stocks have rallied and Trumps ability to move some of his agendas forward. That is why I do not think the markets are going to go too far up or down, and that the ES will fall into some type of trading range.
Yesterday, the ESM opened at 2350.75, pushed up to an early high of 2354.50, sold back off down to 2346.50, and then stutter stepped to the 2356.00 level. From there the ESM sold back off under the VWAP at 2350.50 traded back up to 2354.00 at 12:20 ct.
Over the last few weeks the S&P 500 futures volume jumped as high at 2.7 million contracts in one day, and yesterday’s total volume was 1,200,000, with 200,000 of that coming from the Globex pre-8:30 futures open. It’s the third trading day of the new quarter. Mondays MOC was buy $400 million and it’s our guess todays MOC buy is going to be even larger. I put this out at 10:19 CT:
11:19:05 ET TRADINGDATA2: (driley) They sold 1.4 bil on Friday and bought $400 mil yesterday; that leaves $ 1 bil to buy. If the ES bottoms over lunch time and starts going up i think it means big to buy
I called for a NHOTC (New highs on the close) as the MiM continued to increase to the buy side, and the (ESM17:CME) reacted in kind. The futures pushed all the way up to 2358.50 on the 3:15 CT futures close. In the end I had a good feel for what was going to happen. In the view my call was one sided; buy weakness. I did not put in sell the rallies because I firmly believed that the big investment firms / mutual funds would put the money they sold on the last trading day of March back to work in the new quarter. I also knew that with the volume so low it would be easy to manipulate if the buyers wanted to push it higher.
In the end the overall tone is bullish and the lower volumes are working in favor of the upside. In most cases the mutual funds buy on the first 3 trading days of the new quarter, so far they are 2 for 2. And lastly, the ES has been back and filling and has made several higher lows. Based on how the futures went out, it seems like the high of this push is not in yet.
While You Were Sleeping
Overnight, Asian equities rallied as all markets came back online followed by a mostly higher but choppy Europe. In the U.S., the S&P 500 futures opened the overnight session at 2368.75 and made an early 2359.75 high on the open before lagging for much of the session pushing down to a low of 2352.50 early in the Euro session. Since then the ES has traded back up to 2357.25, and as of 6:04 am cst the last print is 2354.75, down 1.75 handles, on volume of 86k.
In Asia, 8 out of 11 markets closed higher (Shanghai +1.48%), and in Europe 7 out of 11 markets are trading higher this morning (DAX -0.28%). Today’s economic calendar includes MBA Mortgage Applications, ADP Employment Report, Gallup U.S. Job Creation Index, PMI Services Index, ISM Non-Mfg Index, EIA Petroleum Status Report, and the FOMC Minutes.
Welcome To TurnAround Tuesday
Our View: ADP today and the jobs number on Friday. The ESM has been back and filling again. This type of low volume price action is very hard to fight. With the mutual and etf funds buying, it’s possible we continue to see some type of early day pull back and then start going back up. I still think there is unfinished business on the downside, but not today. Not today, or this week, and maybe not until May or June, but if memory serves, that is the time of year that the shake outs begin. Our view is to sell the rallies and buy weakness, or buy the ES after everyone sells it down, and go walk your dog.
PitBull: CLK osc 26/-10 turns up on a close above 5194, ESM osc 8/-4 turns up on a close above 236963, VIX osc -1/1 turns down on a close below 1191.
Market Vitals for Wednesday 04-05-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/04/Market-Vitals-17.04.05-1.pdf”]
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed higher: Shanghai Comp +1.48 , Hang Seng +0.57, Nikkei +0.27%
- In Europe 7 out of 11 markets are trading higher: CAC +0.12%, DAX -0.28%, FTSE +0.08% at 6:00am ET
- Fair Value: S&P -3.85, NASDAQ +1.37, Dow -62.26
- Total Volume: 1.2 mil ESM and 1k SPM traded
No responses yet