Well, there is always a time when the markets stop going up, and Friday jobs report was a good reason. After the VIX traded down to its lowest close in 20 years, and a loss of 33,000 jobs, the S&P 500 futures (ESZ17:CME) took a breather. The other thing hanging over the markets is the North Korean holiday coming up this week. Columbus day happens to fall the day before the anniversary of the founding of the North Korean communist party.
Friday, the ESZ made a globex low at 2543.25, and opened at 2544.25 on the 8:30 futures open. After a few attempts and failures at the vwap, the ES pulled back down to 2544.00, and then traded 2547.50 before getting hit by a few small sell programs down to 2543.25. From there, the ES popped back up to 2545.25, then sold off down to 2541.75, rallied back up to 2544.75, and then ‘triple bottomed’ at the 2541.50 level. After the low was made, the ES rallied back up to 2544.75, and then sold off 2542.00.
From 9:00am to 1:00pm CT The ES traded in a 3.5 handle range. While there was some early trade, things slowed down early, and stayed that way. At 2:10 the ES traded up to 2546.00, and then pulled back down to 2544.25 as the MiM went from $398 million to buy to $306 million to buy, and then dropped down to $38 million to buy at 2:30. Just a few seconds before the official 2:45 cash imbalance came out, the MiM popped up to over $900 million to buy. The actual NYSE MOC came out buy $1 billion, and the ES rallied up to 2547.50 before the 3:00 cash close, and sold off down to the 2544.50 area on the the 3:15 futures close.
There was a little trade in the beginning of the day, and a little trade in the final 30 minutes. Other than that, there was little to no trade. I got the feeling that with the markets up so much, there was some market anxiety about what North Korea may pull this week.
In the end the S&P 500 futures (ESZ17:CME) settled at 2545.00, down -5.00 handles, or -0.19%; the Dow Jones futures (YMZ17:CBT) settled at 22694, down -46 points, or -0.20%; the Nasdaq 100 futures (NQZ17:CME) settled at 6064.25, down -1.50 points, or -0.02%; and the Russell 2000 (RTYZ17:CME) settled at 1511.60, down -3.90 points, or -0.26% on the day.
While You Were Sleeping
Overnight, equity markets in Asia traded mostly higher, with Dow Jones Shenzhen NDX leading the way at +1.51%. In Europe, most majors are also trading higher this morning, with the PSI20 topping the charts at +0.39%.
In the U.S., the S&P 500 futures opened last night’s globex session at 2543.25, which would hold as the overnight low, and immediately began a steady move higher that would last all night. Compared to the last few weeks, last nights trading range of over 7 handles was a nice change of pace. The ES is currently making new highs, and as of 6:50am CT, the last print is 2550.50, up +5.50 handles, with 92k contracts traded.
In Asia, 9 out of 11 markets closed higher (Shanghai +0.77%), and in Europe 10 out of 12 markets are trading higher this morning (FTSE -0.25%).
There are no economic reports today.
Our View: With the volumes and the VIX at record lows, North Korea threatening to blast off an intercontinental ballistic missile capable of reaching the U.S., and President Trump hinting of military action against North Korea saying on Twitter that “only one thing will work” on the secretive communist state, things could get a little ‘jittery’.
October 10th is the Korean Workers Party founding day. That’s Tuesday in North Korea, but it’s Monday (today), the Columbus Day holiday, in the U.S. Our view is to be cautious. Unless you have been long the first 5 trading days, October has been a very one sided trade, and today’s holiday, provided North Korea doesn’t do anything, could be a very slow day. We do not think the rally is over, but like we said last week, the markets are very over extended, but it doesn’t seem to matter.
Market Vitals for Monday 10-09-2017
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 9 out of 11 markets closed higher: Shanghai Comp +0.77%, Hang Seng -0.46%, Nikkei +0.30%
- In Europe 10 out of 12 markets are trading higher: CAC -0.01%, DAX +0.03%, FTSE -0.25%
- Fair Value: S&P -2.14, NASDAQ +2.99, Dow -52.51
- Total Volume: 1.1mil ESZ & 561 SPZ traded in the pit