Yesterday, after showing weakness late in the Globex session, the S&P 500 futures (ESZ17:CME) opened the regular cash session at 2490.75, down 4.25 handles. The ES made a low of 2489.00 fifteen minutes into the session, before once again rallying up to a 2496.25 high just after 10:00am CT, completing a 7.25 handle range.
The last five hours of the session was a real chop fest, maintaining a three handle range before settling at 2494.75, down a tick from the prior cash close, making it three days in a row closing between 2494 and 2495. Volume on the Dec contract was above 1.3 million, but if you take away the spread volume, then it was sub one million. The market on close imbalance came in at $630 million to buy.
Once again, the S&P looked like it did the last three sessions, buyers coming in just below 2490, and sellers above 2494. As for the last three sessions, the total range has been 10 handles, this has for sure been one of the slowest three day periods in recent memory, especially given the quad witch expiration today.
After the close yesterday, news reports broke that North Korea fired a missile that went over Japan and caused for public alerts, before eventually sinking in the Pacific Ocean. North Korea had been making certain military preparations this week, and was in continued chatter about sinking Japan into the ocean.
The S&P 500 futures opened Globex last night and dropped down to 2487, a seven handle pullback, and the yen was initially volatile. It was announced that the U.N. Security Council will meet regarding these developments, but there was no immediate reaction from Trump. The futures began to push higher in the overnight, as once again the world adapts and grows calloused to an unstable dictator.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the upside, led by the NIKKEI, which closed up +0.52%. Meanwhile, in Europe, most majors are trading lower this morning, with the FTSE leading the move down at -1.12%.
In the U.S., the S&P 500 futures opened last nights globex session at 2493.75, and was immediately met by a sell program that took the ES all the way down to 2487.00, which would hold as the overnight low. The ESZ has since recovered, and is currently trading just off the highs. As of 7:20am CT, the last print in the ES is 2492.25, down -2.00 handles, with 209k contracts traded.
In Asia, 6 out of 11 markets closed higher (Shanghai -0.53%), and in Europe 9 out of 12 markets are trading lower this morning (FTSE -1.12%).
Today’s economic includes Retail Sales (8:30 a.m. ET), Empire State Manufacturing Survey (8:30 a.m. ET), Industrial Production (9:15 a.m. ET), Business Inventories (10:00 a.m. ET), Consumer Sentiment (10:00 a.m. ET), and the Baker-Hughes Rig Count (1:00 p.m. ET).
Our View
From here it looks like more of the same. Water in the bathtub, two sided price action, low volume, no momentum, and the world shrugging off North Korean efforts to flex their muscles.
There could be a case made for new highs to close the week, and there could be a case made for some profit taking to end the week. Either way, we will probably get more of the same, a slow market.
If selling momentum is slow, then we want to be buyers of dips above 2485, and if the S&P is pushing above 2495 today, then we would prefer not to be sellers, but would expect some Friday charm to push up to 2500.
PitBull: CLX osc 14/5 turns down on a close below 48.99; ESZ osc turns up on a close above 2508.07; VIX osc -11/-7 turns up on a close above 10.79; ESZ LOOKS LIKE IT IS NOW ON A SELL SIGNAL, AND VIX IS LIKELY TO GO ON A BUY SIGNAL… OIL REMAINS UP FOR NOW.
Market Vitals for Thursday 09-15-2017
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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 -0.53%, Hang Seng +0.11%, Nikkei +0.52%
- In Europe 9 out of 12 markets are trading lower: CAC -0.14%, DAX +0.04%, FTSE -1.12%
- Fair Value: S&P -1.93, NASDAQ +7.37, Dow -40.14
- Total Volume: 1.35mil ESZ & 3k SPZ traded in the pit
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