The S&P is doing exactly what it has been doing for the last eight years, making new highs. On October 8th 2007, the E-Mini S&P 500 futures made a new all time high at 1586.75, and along came the U.S credit crisis. The ES did not get back to its ‘high water mark’ until April 8, 2013, 5 years and 6 months later. Since taking out the old high, the S&P has made new all time highs in 27 of the last 48 months. If a new high is made this month, it will be 28 of the last 48 months that the S&P made a new high.
The S&P has had an astonishing 275% run since it’s 666 credit crisis lows. Since the Federal Reserve lowered interest rates to zero and implemented three separate quantitative easing programs, followed by “Operation Twist”, thus marking up $4.5 trillion in debt, it’s been ‘one new high after another’ in the U.S. equity markets. Whether you are a bull or a bear, there is no denying the overall price action… Make a new high, get the public to get short into an event, and then take back half or more of the decline in just a few days.
Yesterday was a big day of rips and dips, with the Trump tax cut headlines hitting the tape at 1pm cst. The ES traded to 2394.75 just after 10:30, up 9.75 handles, and then sold off down to 2386.25 just before 11:00. The ES then double topped at 2392.00, pulled back a little, and popped up to 2393.75. From there, the ES dropped back to where it previously held at 2389.25 before rallying back up to 2393.50, just 1 tick below the earlier high. After that, the futures sold off down to 2387.50, rallied back up to another lower high at 2392.25, and then sold off down to 2387.00 as more of Trumps tax plan hit the tape.
The ES opened the day on an uptick, trading up to the 2394.00 area, and then sold off into the close, settling at 2382.75, down 2.25 handles. In the end, it was a day filled with a lot of ups, and a lot of downs. In terms of the day’s overall volume, 1.49 million ESM17’s traded. In terms of the S&P’s overall tone, the future’s still seem to have room on the upside. We have seen this before; when the futures are close to a new high, they tend to sell off a little bit, and then creep back up.
While You Were Sleeping
Overnight, equity markets in Asia were mixed, with an overall quiet tone. European markets are all in the red this morning, as the majors are modest to moderately lower. In the U.S., the S&P 500 futures have been quiet after opening the globex session at 2381.50, and then making a low of 2381.25. The overnight high came on the Euro open at 2384.75, completing a 3.50 handle range on volume of 77k, with the last print being 2382.75, up two ticks, as of 5:47 am cst.
In Asia, 6 out of 11 markets closed higher (Shanghai +0.37%), and in Europe 9 out of 9 open markets are trading lower this morning (FTSE +0.62%). Today’s economic calendar includes the Weekly Bill Settlement, 52-Week Bill Settlement, Durable Goods Orders, International Trade in Goods, Jobless Claims, Retail Inventories, Wholesale Inventories, Bloomberg Consumer Comfort Index, Pending Home Sales Index, EIA Natural Gas Report, Kansas City Fed Manufacturing Index, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 7-Yr Note Auction, Farm Prices, Fed Balance Sheet and Money Supply.
Our View
Up, down, and all around, all on little volume. If you think the volume is low now, just wait until June and July. That said, we have a very busy economic and earnings schedule today. Yesterday, the ES ran the buy stops up to 2394.50, but stopped short of running the stops above the 2396-2397 area. The next stop run to the upside could take the ES upto 2408-2412. What we do not want to do is to start getting ahead of ourselves. The ES has rallied sharply, and is up against the ‘big figure’ at 2400.00. It’s possible that the futures stop short of the level.
Our view is to be careful. Everyone that was thinking lower last week is talking new highs. We lean to selling the early to mid day rallies and buying weakness, keeping in mind all of the geopolitical events, and the looming budget battle.
Market Vitals for Thursday 04-27-2017
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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 +0.37%, Hang Seng +0.49%, Nikkei -0.19%
- In Europe 9 out of 9 open markets are trading lower: CAC -0.42%, DAX -0.24%, FTSE -0.62%
- Fair Value: S&P -3.50, NASDAQ -1.74, Dow -63.42
- Total Volume: 1.49 mil ESM and 3.6 k SPM traded
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