The S&P 500 futures (ESU17:CME) sold off down to 2442.75 on Globex after North Korean leader Kim Jong Un calls recent missile launch a ‘prelude to containing Guam.’ Then, President Trump came out saying that talking to North Korea is ‘not the answer,’ he ripped U.S. ‘extortion’ payments, and also said that ‘all options are on the table.’
There is no larger issue for the markets then what’s going on with North Korea. If war breaks out the S&P will go down sharply. If nuclear missiles are fired the S&P will go into a ‘death spiral’ beyond anything we have ever seen. How long can Trump hold off is anyone guess, but my own feeling is it’s not going to be a forever thing. He is a very unpredictable president, and with so many military assets on the ground in Asia, it’s hard to believe they will not be used at some point.
On yesterday’s open, total Globex volume was 212,000, half of Tuesday’s pre-8:30 futures open volume. The first print of the day was 2445.00, and then the ES traded above the vwap up to 2448.00. The trade was very similar to Tuesday’s trade, it kept going up and up without any real pullback, and by 1:00 CT was trading 2459.00, up 11.50 handles, before leveling off back down to 2453.00 just before 3:00 pm CT. In the end, the ES settled the day at 2456.00, up 8.50 handles, on volume of 1.3 million contracts.
September’s Waning First Trading Day Bullishness
-From Stock Traders Almanac
Although the first trading day of September has been up in 13 of the last 22 years, this trend appears to be fading as the S&P 500 has been down seven of the last nine first trading days. This trend is mostly reflected in the DJIA while NASDAQ has been up in five of the last nine first trading days. 2015’s nearly 3% across the board shelling was the worst first trading day of September since 2002. This year the first trading day falls on Friday before the three-day Labor Day holiday weekend and could be influenced by lower than average volume due to the holiday.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the upside. Meanwhile, in Europe, all majors are currently trading higher this morning.
In the U.S., the S&P 500 futures opened last night’s globex session at 2455.25, and printed the overnight low of 2454.75 in the first few minutes of trading. After that, the ES traded sideways, until just before 3:00am CT, when the ES got a boost from European stocks and ripped up to a new high at 2465.00. As of 6:45am CT, the last print in the ES is 2461.25, up +5.50 handles, with 141k contracts traded.
In Asia, 6 out of 11 markets closed higher (Shanghai -0.08%), and in Europe 12 out of 12 markets are trading higher this morning (FTSE +0.70%).
Today’s economic calendar includes Chain Store Sales, Challenger Job-Cut Report (7:30 AM ET), Jobless Claims (8:30 AM ET), Personal Income and Outlays (8:30 AM ET), Chicago PMI (9:45 AM ET), Pending Home Sales Index (10:00 AM ET), EIA Natural Gas Report (10:30 AM ET), Fed Balance Sheet (4:30 PM ET), Money Supply (4:30 PM ET).
Our View
Another Globex high overnight pushed the S&P’s within 10 handles of the mid month high of 2474.50, and within 23.50 handles of the all time high. Plenty of buy stops have been taken out, and there could be more to come. Tomorrow is NFP, and with the ESU up 44 handles from this week’s low, we could see some profit taking ahead of the number.
However, the dip buying trend is the one that is rewarding, we still lean toward buying the early dips, and if you must sell, wait until a rally midday after the Euro close.
PitBull: CLV osc -22/-10 turns up on a close above 46.49; ESU osc 10/-9 turns down on a close below 2446.55; VIX osc -14/6 turns down on a close below 9.20.
Market Vitals for Thursday 08-31-2017
[gview file=”https://mrtopstep.com/wp-content/uploads/2017/08/Market-Vitals-17.08.31.pdf”]
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 -0.08%, Hang Seng -0.44%, Nikkei %
- In Europe 12 out of 12 markets are trading higher: CAC +0.74%, DAX +0.67%, FTSE +0.70%
- Fair Value: S&P -0.62, NASDAQ +1.88, Dow -3.24
- Total Volume: 1.3mil ESU, and 1.2k SPU traded in the pit
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