The Dow Jones futures (YMU17:CME) has closed higher 10 sessions in a row. While the S&P 500 futures (ESU17:CME) and Nasdaq futures (NQU17:CME) have not closed up 10 in a row like the #YM has, they also have not pulled back very much.
At 2:30 CT yesterday, the total trading range in the S&P 500 futures was 2472.75 to 2476.25. Over the next hour, the ES was able to creep up to 2480.25. The MiM started out showing $185 million to buy before it ‘flipped’ to $25 million to sell. Get this… there was a total of 470,000 ESU’s traded, with 116,000 of that coming from Globex pre-8:30 futures open. That means, in just over 6 hours, only 354,000 ES had traded.
It’s not ‘almost unheard’ of, it IS unheard of. Never before have I seen lower volume, not even on a holiday.
As we have always said, we like to write about the markets, but there really isn’t much to say. The end of the summer trade is in full gear, and most investors are in a hurry to take time off before school starts.
In the end the S&P 500 futures (ESU17:CME) settled at 2477.50, up 5.5 handles, or +0.22%, the Dow Jones futures (YMU17:CBT) settled at 22061.00, up 44 points, or +0.20%, and the Nasdaq 100 futures (NQU17:CME) settled at 5933.25, up 35 points, or +0.60%.
Slow Melt Up
While talk has gone wild about the VIX and all the risk, the Dow Jones futures (YMU17:CME) closed at a new all time high for the 8th consecutive trading day, and its 34th time in 2017. Other than the 1990s the only other time there were so many was the 122 all time highs from 2013-2016. Below is a graph by Pension Partners showing the number of all time new highs from 1910 to present.
I know there have been a lot of comparisons to the run up in 1987, and the 2000 tech bubble, and even I have said it, but it’s way beyond that, rates were way higher back then. While we do not know when it’s going to change, fighting the uptrend has not been very satisfying. Other than a few small pullbacks, it’s been all ‘upside’. It has clearly been a great example of the old adage; ‘the trend is your friend’, and in this case, until further notice.
While we are paying attention to the PitBulls warning about a possible u-turn from the last week of July to the third week of August, we also think (like we have been saying) that the next targets for the ES is 2485.00, and then 2500.00, with a possible top at the 2535.00 to 2540.00 area. When the upside party will end is anyone’s guess, but for now, it’s best to just go with the flow.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the upside. Meanwhile, in Europe, most markets are trading lower this morning, led by Denmark’s OMXC20 Index, which is currently down -0.86%.
In the U.S., yesterday’s stale trade in the S&P 500 futures followed through into the globex session, with the ES being held to just a 4 handle range. The high at 2477.50 was printed right on the open, and currently, the ES is trading on its lows. As of 6:45am CT, the last print in the ESU is 2474.00, down -3.50 handles, with 80k contracts traded.
In Asia, 7 out of 11 markets closed higher (Shanghai +0.11%), and in Europe 10 out of 12 markets are trading lower this morning (FTSE -0.04%).
Today’s economic calendar includes the NFIB Small Business Optimism Index (6:00 AM ET), JOLTS (10:00 AM ET).
Earnings: Dean Foods, Gray Television, Hertz Global, Hostess Brands, Liberty Interactive, Lions Gate, Priceline, Ralph Lauren, Sunoco, Time, Valeant Pharmaceuticals, Walt Disney.
Our View
What’s the old saying? I’d rather fight than switch? Well, somewhere in here, the markets will sell off. We all know they are extremely overbought, but that doesn’t seem to matter. Aside from a holiday, yesterday saw one of the narrowest ranges, and lowest volume of the year.
Thin to win is has been, and remains, in force. I am just like everyone else, I want to see a sell off, but waiting for it is next to impossible. Our view is for higher prices. Wait for the early pull back (if any), and buy weakness.
PitBull: CLU OSC 2/17 TURNS UPON A CLOSE ABOVE 49.74; ESU OSC 3/16 TURNS DOWN ON A CLOSE BELOW 2468.84; VIX OSC 3/-3 TURNS UP ON A CLOSE ABOVE 11.02.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed higher: Shanghai Comp +0.11%, Hang Seng +0.59%, Nikkei -0.30%
- In Europe 10 out of 12 markets are trading lower: CAC -0.09%, DAX -0.07%, FTSE -0.04%
- Fair Value: S&P -2.52, NASDAQ -1.46, Dow -49.04
- Total Volume: 597k ESU, and 283 SPU traded in the pit
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