I told the PitBull yesterday that a lot of traders stopped trading over the holidays and have decided to wait until they get a look at what the markets look like post inauguration. It becomes hard to find buyers with the S&P futures (ESH17:CME), the Dow Jones Futures (YMH17:CBT) and the Nasdaq 100 futures (NQH17:CME) all within striking distance of their respective all-time highs, but at the same time, the bulls are still in control.
There is a high level of anxiety out there right now. Foreign governments, everyone from China to Germany, just can’t gauge what will the president-elect will do next, nor can the global markets. What we do know is no one has ever seen the likes of Donald Trump, and while the DOW is up nearly 10% since his election, will we feel it’s highly unlikely the next 10% will be up.
With just over 11 months left in the year it could prove to be a ‘very long year’ for investors. Our advice is to keep your risk low until the end first quarter, or until after the new president gets his feet wet. From the Brexit low at 1980, the S&P 500 futures are up 290 handles, or 17%, and from the election week lows, the futures are up 235 handles, or 14.5%.
Yesterday was more of the same for the benchmark S&P 500 futures. The cash session opened the futures at 2264.75, up about 2.25 handles, before strong sell programs took risk off, pushing the futures lower in the first ten minutes, down to the daily low of 2258.25. However, once again, that area just below 2260 held up, and the water in the tub moved the other direction, rebounding to make a morning high of 2265.75 to close out the first hour. From there the index went sideways for the next 5 hours, trading in a 4.75 handle range, before some buying came in the final hour. The late push took the index futures up to 2267.50 before settling at 2266.00, up 3.50 handles, as the MOC buying came in at $1.1 billion dollars to the buy side.
Today’s calendar is heavy again with some noticeable releases, more Fed speak, and the ECB potentially being the most relevant. At this point, it doesn’t look like any of this will be market moving, as equities have been quiet all week. Even the January option expiration seems to be taking a back seat to the Trump inauguration. Could this be the calm before the storm? It’s possible. The one obvious potential catalyst in this market right now is Donald J. Trump, and he is set to take office now in just a matter of hours.
While You Were Sleeping
Asian and European stock markets were again mixed, with Asia having a buy side advantage and Europe having a sell side advantage, which has been pretty much the trend lately. The S&P futures opened globex at 2265.60 and traded up to 2268.25 before the Tokyo open, and once again found resistance on its way up to 2270 as sellers came in and pushed the index down to 2261.50 early in the Euro session. Again, on its way lower, buyers came in and pushed the water in the bathtub in both directions. The S&P’s last trading 2264.75, down 1.75 handles on volume of 82k as of 7:00 am cst.
In Asia, 8 out of 11 markets closed higher (Nikkei +0.94%), and in Europe 6 out of 11 markets are trading lower this morning (FTSE -0.47%). Today’s economic calendar includes the Weekly Bill Settlement, Housing Starts, Jobless Claims, Philadelphia Fed Business Outlook Survey, Bloomberg Consumer Comfort Index, John C. Williams Speaks, EIA Natural Gas Report, EIA Petroleum Status Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 2-Yr FRN Note Announcement, a 2-Yr Note Announcement, a 5-Yr Note Announcement, a 7-Yr Note Announcement, a 10-Yr TIPS Auction, Fed Balance Sheet, Money Supply, and Janet Yellen Speaks.
Only 28 Hours To ‘D Day’
Our View: There are exactly 28 hours until Donald Trump takes over the White House. The ESH17 traded up to 2268.25 and down to 2261.50 overnight. That is a 6.75 handle range. It’s funny, the earnings season is in full gear and nobody’s even talking about them. Donald Trump has taken over the airwaves and it’s all coming down to his inauguration tomorrow at noon. While several high ranking Democrats have decided not to go, that will not diminish what has been the most decisive run for the White House in the history of U.S. politics.
To this point, there has been a small pull back, but no major selling like many people thought there would be. Clearly, the trading public has been staying out of harm’s way, and for good reason. For the last 6 weeks the S&P 500 futures have been stuck in a 25-30 handle range. Volume has been the lowest in several years because no one really knows what to expect out of the new president. This morning we have the busiest economic schedule of the week, along with John Williams from the Fed, and Janet Yellen speaking tonight. Our view is for more of the same choppy, low volume, trade. We lean to buying the early weakness and selling the rallies today. There could be some selling coming in late in the day.
Download all of the January expiration stats here.
Most volatility in decades is NOW – [AUDIO FILE]
Alan Palmer
NASDOG.com
312.498.6840
Market Vitals for Thursday 01-19-2017
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The S&P 500 Futures: Trump Inauguration Rip or Dip?
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets are trading higher: Shanghai Comp -0.38%, Hang Seng -0.21%, Nikkei +0.94%
- In Europe 6 out of 11 markets are trading lower: CAC -0.08%, DAX +0.01%, FTSE -0.47% at 6:00am ET
- Fair Value: S&P -4.96, NASDAQ -4.15, Dow -69.12
- Total Volume: 1.1m ESH and 2.6k SPH traded
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