Yesterday, the S&P 500 futures continued its strength from the globex session as buy programs pushed the index higher from the open. It never looked back as it pushed up to a 2079.75 high, breaking last weeks high, and made it nearly 50 handles from Friday’s 2030.50 low and 30+ handles from Tuesday’s globex low.
Overnight, world markets were unable climb on the S&P’s momentum, as Asian and Euro indices dipped for the most part. The ESM16 traded down to 2069.50, but the 10 handle sell off was supported as the index pushed higher back up to 2075, and currently sits just a few ticks from that spot. Globex volume is 155K at 6:45 am CST, less than two hours before the cash open.
Today, the economic calendar is light for the third consecutive day, but does feature the EIA Petroleum number, which will likely move crude oil and could cause an effect with the S&P. After three consecutive days of strength, it would make sense for equities to trade lower, but given the light calendar and low volume, it appears that thin-to-win is likely the path of least resistance.
Levels we will be watching are the 2069.50 low from overnight, we believe that price is a good buy on first touch, but below that we could see price travel back to yesterday’s 2062 area open. To the upside the 279.85 high from yesterday is an important number, not knowing where the ESM will open the cash session we are uncertain if that area will be a good fade. However, a break above that level opens the door for another trip to 2100, especially in this thin-to-win lower volume type chop.
In Asia, 6 out of 11 markets closed higher (Shanghai +0.16%), and In Europe, 9 out of 12 markets are trading lower this morning (DAX -0.80%). Today’s economic calendar includes MBA Mortgage Applications, EIA Petroleum Status Report, a 10-Yr Note Auction, and Treasury Budget..
Thin to Win Prevails
Our View: The shorts got a small reprieve last week, and from what it sounds like, they did not cover. What do they know that we don’t? I think the main thing traders should be thinking about is if the trade is like this now, what will it look like in late June or late July? Yesterday our view was to buy early weakness but there was none after a ramp up on the open. Today we maintain the same, to buy early weakness above 2060, or maybe in this environment just plain buy, as it looks like 2100 is in sight again setting up for an epic retest of 2100 on the 52 week anniversary of the most recent 2135 all time high. Of course, when we all start thinking the same way, the market will usually do what screws the most people. If 2079.75 fails today, then that could be the sell price of the day, leading the index lower into the 2060-62 area where again, we look to buy the weakness.
The MrTopStep BootCamp is May 16-20. It’s a very impressive line up of traders that would be hard to find any place else. We have always considered our traders as part of a collective, sharing ideas, price levels and any pertinent news that may be moving the markets. This bootcamp is especially loaded with with top tier traders. If you have never joined the bootcamp I suggest you do. Not only will you see how they do it, you will be able to watch the live trading. There really is no other trading education service like this, and it’s unique to the retail trading business, but it’s not all retail. Many of the things we use and talk about are exactly the same stuff we worked with on the trading floor when we were talking to the big banks and hedge funds (too bad they didn’t listen). That said I have posted the weekly schedule for you to review and the link to the sign up.
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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 +0.16%, Hang Seng -0.93%, Nikkei +0.08%
- In Europe 9 out of 12 markets are trading lower: CAC -1.00%, DAX -0.80%, FTSE -0.15% at 6:30am CT
- Fair Value: S&P -4.36, NASDAQ -5.74, Dow -50.94
- Total Volume: 1.4mil ESM and 4.2k SPM traded
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