The global markets got hit by a wave of selling earlier this morning as twin explosions rocked Zaventem Airport and Maelbeeck metro station in Brussels, Belgium; leaving over 26 people dead and up to 81 injured. While the S&P futures may be in an uptrend, it is events like this that can cause, what we term,‘news turning’ events.
Yesterday MrTopStep told several hundred of his followers that at 2040, the next 60 points in the S&P would be down. While this morning’s news is a big negative for the markets the shortened holiday week in the U.S. and the bombings will only push more trading volume out of the global markets.
Monday, the S&P 500 futures saw the lowest volume of the year, as well as one of the tightest ranges of the year. The index made an early low of 2032.75 and then proceeded to grind higher throughout the day’s session, breaking the globex high in the afternoon at 2044.50, before paring some of those gains into the close on the heels of a market-on-close buy imbalance of $370 million and settling the regular session at 2042.50, up 3.75 handles.
Overnight, the futures traded lower as the European indices saw a wave of selling which helped push the ESM16 down to the 2028 area. A little later there was a push back to 2040, and the futures are currently trading back down at 2034.50, down 8.25 handles. The 2042.75-2044.25 range that we spoke of yesterday still remains key, as the cash session high was at 2044.50, followed by a 2044.75 globex high before the index failed. 2050 still seems to be a magnet, but there seems to be more sellers heading higher than buyers at the moment, similar to how the 2000 level first traded in February.
To the downside, the 2031-2027 levels we spoke of yesterday remained key in both the cash session on Monday as well as globex this morning, as yesterday’s RTH low of 2032.75 held and then overnight the 2028.75 price held. Right now the markets are still in dip buying mode, and a low volume thin-to-win situation, however, the statistics point to a weaker trade so we are considering both sides of the coin. As we see it, until the sellers can push below Friday’s globex 2027 low and convert that price to resistance, then we do not expect any meaningful downward momentum. Once below 2027 we expect to see a trade down near the 2000 area. From a bullish viewpoint, as long as buyers continue to hold these small early dips, the current environment favors a slow and painful grind higher up to 2050.
In Asia, 6 out of 11 markets closed higher (Shanghai Comp -0.64%), and In Europe 12 out of 12 markets are trading lower this morning (DAX -0.51%). Today’s economic calendar includes Redbook, FHFA House Price Index, PMI Manufacturing Index Flash, Richmond Fed Manufacturing Index, 4-Week Bill Auction, Charles Evans Speaks and Patrick Harker Speaks.
Turn-Around Tuesday
Our View: It’s 7:00 am CT and globex volume is just over 200K. Today’s calendar is relatively light. Currently, the ESM16 chart looks like it is rolling over after having been resisted several times just below 2045, and has since made a series of lower highs on the 15 minute chart. However, given this environment we suspect that it will be difficult to slam the index lower. We see a retest of the globex lows in the cards today and want to buy that early dip if it holds and try to keep a long position throughout the day’s grind higher. If the globex low does break and holds as resistance, then we lean toward a sell bias down to the 2000 area.
As always, please use protective buy and sell stops when trading futures and options.
MrTopStep Mid-Day Update with Top Notch Trading
https://youtu.be/UH5cAQPBbos
- In Asia 6 out of 11 markets closed higher: Shanghai Comp -0.64%, Hang Seng -0.08%, Nikkei +1.94%
- In Europe 12 out of 12 markets are trading lower: CAC -1.25%, DAX -0.51%, FTSE -0.62% at 5:30am CT
- Fair Value: S&P -9.65, NASDAQ -11.17, Dow -105.33
- Total Volume: 1.27mil ESM and 2.2k SPM traded
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