S&P 500 Futures: VIX Under 10, No One Cares Until They Do

Charts, Commentary, News, Our View, Stocks, Technical Analysis, The Opening Print, Trades

Yesterday’s Globex session was fairly uneventful. The ESU was held to just a 6 handle range, with only 144k contracts traded. Going into the 8:30am CT cash open, stocks index futures were all trading right around the Wednesday’s settlements. When the bell rang, the S&P 500 futures (ESU17:CME) opened up at 2441.75, up +1.75 handles, and the Nasdaq 100 futures (NQU17:CME) opened at 5786.75, up +1.00 point.

As Janet Yellen came out for day 2 of her testimony to Congress, the ES did a sort of ‘head fake’, first trading up to 2445.00, then turning lower down to 2439.00, which would eventually be the low print for the day. The NQ duplicated this pattern with a move up to 5808.50, then a break down to 5772.25, also the low of the day.

Once the lows were in, the futures began a slow grind higher, eventually testing the overnight globex highs, but unable to breach them. Once the highs were tested, the ES fell asleep, and floated in a 4 handle range for the rest of the session.

In the end, the S&P 500 futures (ESU17:CME) settled at 2445.50, up +5.50 handles, or +0.22%, the Dow Jones futures (YMU17:CBT) settled at 21509, up +26 points, or +0.12%, and the Nasdaq 100 futures (NQU17:CME) settled at 5797.50, up +11.75 points, or +0.20%.

While You Were Sleeping

Overnight, equity markets in Asia traded mostly higher, led by the Singapore Exchange, which closed up 1.6%. Meanwhile, in Europe, most markets are trading higher this morning, however, the gains are marginal.

In the U.S., the S&P 500 futures followed the same overnight pattern we’ve seen all week; low volume and a tight 5 handle range. The ESU opened the globex session at 2446.50, a high of 2447.25 was made at 10:00pm CT last night, and the low at 2442.00 was made at around 4:30am CT. The ES has since recovered from the lows, and as of 6:30am, the last print is 2444.50, down -1.00 handle, with 75k contracts traded.

In Asia, 9 out of 11 markets closed higher (Shanghai +0.13%), and in Europe 9 out of 12 markets are trading higher this morning (FTSE -0.19%). Today’s economic calendar includes Consumer Price Index, Retail Sales, Industrial Production, Robert Kaplan Speaks, Business Inventories, Consumer Sentiment, and the Baker-Hughes Rig Count.

From Stock Trader’s Almanac : Buyers Beware

Seasonal Sector Trade: S&P 500 Stumbles in Late July

Selling the September S&P 500 futures contract on or about July 17 and holding until on or about July 26 has a 60% success rate registering 21 wins against 14 losses in the last 35 years. The best win was $19,150 in 2002, and the worst loss was in 2009, posting a $12,650 bereavement. This trade had been successful in 13 of 15 years from 1990 to 2004. However since then it has nearly the opposite record, posting losses in 9 of 12 years from 2005-2016.

July starts the worst four months of the year for NASDAQ and also falls in the middle of the worst six months for DJIA and S&P 500. Mid-July is also when we typically kick off earnings season, where a strong early month rally can fade, as active traders may have “bought the rumor” or bought ahead on anticipation of good earnings expectations and then turn around and “sell the news” once it hits the street.

Dow Sets Fresh Record, While Financials and Retail Rise

The PitBull always talks about ‘mid-month’ money going into the stock market on the 14th or 15th of the month, so we went back over the last 8 months. According to the stats we pulled, the 14th of the month was higher only 3 out of 7 occasions, but 2 of those 3 were up less than a 1 handle, and the 15th of the month closed higher 7 times out of 8.

Our view is the same as yesterday. This rally is not over yet. A new high is going to be made before a 25 handle pullback, and we are looking to buy a small early pullback today.

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 +0.13%, Hang Seng +0.16%, Nikkei +0.09%
  • In Europe 9 out of 12 markets are trading higher: CAC+0.17 %, DAX -0.01%, FTSE -0.19%
  • Fair Value: S&P -2.41, NASDAQ +2.28, Dow -55.22
  • Total Volume: 940k ESU, and 600 SPU traded
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Danny Riley (2085 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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