S&P 500 Futures: Short Lived Rallies / Buy Nasdaq / Sell Dow & S&P

Charts, Commentary, News, Stocks, Technical Analysis, The Opening Print

During Monday nights trade the ES sold off down to 2633.75, rallied up to 2644.50 around 1:30 am, sold back off down to 2635.25 at 5:00 am, and then rallied up to a new Globex high at 2644.75 at 7:35 am. Tuesdays trade started with Asian stocks mostly falling on weakness in the tech sector, and the the Stoxx Europe 600 fell 0.2% before the U.S. futures open. On the 8:30 bell the ES traded 26241.75, rallied up to 2642.75 and then sold off down to the 2638.50 area. There was some back and fill trading above and below the vwap for over an hour, and then it started to short cover around 10:15. The rally took the ES up to 2648.75 at 10:25 CT as the Nasdaq 100 futures ‘popped’ up to 6339.75. But, the rally was short lived, and both markets sold back off. The ES printed down to 2639.25 and the NQ went down to 6302.25. It seemed like the vwap was the battleground for the ES.

Just after 2:00 CT, total volume for the S&P 500 futures (ESZ17:CME) was only 850,000, way lower than the previous 3 sessions. Late in the day, the ES made several new lows, eventually trading all the way down to 2677.25 as the MiM started showing over $1.6 billion for sale. At 2:45 the NYSE closing imbalance came out sell $2.6 billion, and just after the ES rallied up to 2631.25 before selling back off and closing at 2628.50 at 3:15.

I said it several times in the forum that the ES ‘acted’ weak. You could see by the overall price action that the it was struggling, and when the NQ started to trade back above its vwap, and the ES couldn’t hold it, the message was clear. Despite the Nasdaq selling off, it still finished up +0.20%. It looked like the big boys were buying tech and selling the broader market S&P.

Every time the ES rallied someone was leaning on it. In the end the S&P 500 futures (ESZ17:CME) settled at 2628.25, down -10.00 handles, or -0.38%; the Dow Jones futures (YMZ17:CBT) settled at 24,175, down -130 points, or -0.53%; the Nasdaq 100 futures (NQZ17:CME) settled at 6271.75, up +6.50 points, or +0.10%; and the Russell 2000 (RTYZ17:CME) settled at 1516.40, down -14.70 points or -0.96% on the day.

    • In Asia 9 out of 11 markets closed lower: Shanghai Comp -0.29%, Hang Seng -2.14%, Nikkei -1.97%
    • In Europe 10 out of 12 markets are trading lower: CAC -0.46%, DAX -0.93%, FTSE +0.04%
    • Fair Value: S&P -0.19, NASDAQ +1.05, Dow -4.73
    • Total Volume: 1.3m ESZ & 2.4k SPZ traded in the pit

As always, please use protective buy and sell stops when trading futures and options.


Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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Danny Riley (2398 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.

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