Yesterday, after selling off in the globex session down to 2040.75, the S&P futures opened the cash session at 2045.00. After failing to take out any strong sell stops the futures began to push the buy stops up to the 2053.50 area on a large 9:00 am CT buy program. From there buyers found themselves trapped as heavy sells pushed the S&P lower into the European close before making a midday low of 2041.00, just a tick above the globex low, before grinding higher during the lunch hour.
As the markets traded into the afternoon the globex low area of 2041.00 was continually tested, and eventually broke through, leading to a trade down to 2039. Buyers were able to hold the markets head above water, and going into the final hour the MiM showed as much at 600+ million to sell, but we came out on the IM saying that with the market unable to make new lows we saw much of the imbalance as a spoof and believe the S&P’s would rally into the close. At the end of the day the ESM did push up to 2048.50, nearly 10 handles from the lows, before settling at 2046.75, down 10.25 handles on the day.
Overnight, worldwide equity markets traded mixed as the ESM16 traded in a higher grind, making a high of 2060 early in the Euro session, before coming off near to the 2050 area at 6:30 am CT. After yesterday’s slow trade on relatively low volume, and this mornings 160K volume two hours before the cash open, we expect a quiet trade on the day before non-farm payroll, which is pretty typical. The calendar today features jobless claims and then becomes quiet into the open.
The globex high at 2060 coincides with high prints from Tuesday and Wednesday’s sessions and should be a good area for an initial fade. To the downside, 2050 is currently holding, and if bulls want to take charge they need to hold this area to push back up to 2060, otherwise yesterday’s lows below the 2040 area will possibly come into play.
In Asia, 5 out of 10 open markets closed lower (Shanghai +0.22%), and In Europe, 6 out of 12 markets are trading higher this morning (DAX +0.43%). Today’s economic calendar includes Chain Store Sales, Challenger Job-Cut Report, Jobless Claims, Gallup Good Jobs Rate, Bloomberg Consumer Comfort Index, EIA Natural Gas Report, 3-Month Bill Announcement, 6-Month Bill Announcement, James Bullard Speaks, Fed Balance Sheet, and Money Supply.
JOBs Friday on TAP
Our View: The bears got their way again yesterday, but the speed and size of the trading volume dropped. I asked a floor trader from the S&P pit what they were seeing yesterday, and he replied by saying ‘a whole lot of nothing,’ and from the screen side of it, that’s exactly what we were seeing too. It was as we say.. A good ol S&P chop shop. The overnight Globex trading range was 2060.50 High, 2046.25 Low and 2054.25 Last, up 7.25 handles at 7:15 CT, with a total of 175,000 contracts traded. Yesterday’s total volume was only 1.5 million contracts traded, and with the jobs report coming out tomorrow, I suspect today’s volume will be lower. Our view is to buy weakness. Everyone is all bearded up and short.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 5 out of 10 open markets closed lower: Shanghai Comp +0.22%, Hang Seng -0.37%, Nikkei closed
- In Europe 6 out of 12 markets are trading lower: CAC +0.17%, DAX +0.43%, FTSE +0.06% at 6:30am CT
- Fair Value: S&P -5.64 , NASDAQ -5.76, Dow -81.10
- Total Volume: 1.5mil ESM and 4.6k SPM traded
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