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.
While You Were Sleeping
Overnight, equity markets in Asia and Europe traded lower across the board, feeling the pressure from yesterday’s losses in the U.S. stock market.
In the U.S., the S&P 500 futures opened last night’s globex session at 2626.75, and initially traded higher, finding the overnight high at 2631.50 just before 6:30 pm CT. After that, the ES couldn’t muster anymore positive momentum, and started to drift lower. By 1:40 am CT, the low had been established at 2620.00. Since then, things have firmed up a little, with the ES rallying 5 handles off the low, and as of 7:00 am CT, the last print is 2626.50, down -2.00 handles, with 195k contracts traded.
In Asia, 9 out of 11 markets closed lower (Shanghai -0.29%), and in Europe 10 out of 12 markets are trading lower this morning (FTSE +0.04%).
Today’s economic and earning calendar includes MBA Mortgage Applications 7:00 AM ET, ADP Employment Report 8:15 AM ET, Productivity and Costs 8:30 AM ET, and the EIA Petroleum Status Report 10:30 AM ET.
Decembers Weak Start
Our View: After big losses on Monday, technology shares were the only S&P 500 sector to end the day positive. Even though the Nasdaq ended the day higher, the stock markets overall price action was weak. Is this the beginning of the end? No, I do not think so. With 3% growth in the U.S., continued stimulus and big tax cuts coming, we think this is just another pullback that the ‘dip buyers’ will take advantage of. It’s just a matter of time before the crowd gets too short and the ES goes back up. Our view; we lean to buying the early weakness and selling the rallies, but we do not doubt a late day bump up.
Market Vitals for Wednesday 12-06-2017
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- 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.
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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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