S&P 500 Futures vs. Crude Oil Futures
As an S&P futures trader, I always expect some volatility, big moves up and big moves down. That’s not how it has worked over the last 41 sessions after the Brexit vote though. The total trading range, or net change, over that period is only 1.77% (using closing prices). It is the tightest 41 day range ever going all the way back to 1928.
After early buy program the S&P futures (ESU16:CME) traded up to 2186.75 around 9:45 before getting hit by several small sell programs and running downside sell stops. Despite the 6 handles range, and the early rally and drop, the overall trade has been a slow grind. On the other side of the coin, crude oil futures (CLV16:NYM) have been moving all over the place.
S&P Unchanged / CL +3%
As traders we are always looking for something that’s moving. With the average up day in the S&P only + 5 or -7 handles ,and stuck in a narrow trading range, crude oil is a great alternative to the S&P when it’s like this. The net change of the ES was never more than .35% either way in the first part of the day. On the other hand, the net change of crude swung from -0.75% to +1.75%. It’s not hard to see on the daily ES and CL charts that crude oil is the big mover.
Overnight global equity markets were mixed as Asian was modestly firm and Europe has traded modestly weak. The ESU6 traded higher for most of the globex session before making a high at 2189.25 just after 3:00 am cst. Since then the ES has sold off down to 2183.25 and is currently trading at 2183.75, down three ticks on the day, with globex volume coming in at just over 150K.
Today’s calendar doesn’t include anything that will be market moving. While I am not expecting it, there could be some money that begins to flow in/out late this week, and of course the PitBull’s Thursday/Friday low which always has potential. Having said this, neither buyers or sellers are taking care of business. It feels like summer may drift into the middle of the month rebalance and monthly options expiration next week. Bulls were close to new contract highs this morning before being smacked down, but I’m not sure that sellers will have the follow through to make it matter.
In Asia, 7 out of 11 markets closed higher (Nikkei -0.48%), and in Europe 7 out of 11 markets are trading lower morning (DAX -0.18%). Today’s economic calendar includes Weekly Bill Settlement, Jobless Claims, 30-Yr Bond Announcement, Bloomberg Consumer Comfort Index, Quarterly Services Survey, EIA Natural Gas Report, EIA Petroleum Status Report, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 52-Week Bill Announcement, a 3-Yr Note Announcement, a 10-Yr Note Announcement, Consumer Credit, Treasury STRIPS, Fed Balance Sheet, and Money Supply.
ECB meeting and announcement at 7:45AM
Our View: Gartman says oil’s not going above $55 for years. Whenever I hear this kind of stuff it makes me think that this is just a headline grab. No thought process, just a bunch of very stupid stuff. Oil popped almost $1.00 after he said it. I don’t know what these market timers don’t get? That can call any market direction whether it be crude oil or the stock market. This is similar to Mark Fisher saying CL will ‘never trade under $80.’
These types of calls are what I call blow up calls. As for the ES, we have another big round of economic reports to get past, and provided we do, I think there is a good possibility we see 2190 or higher today. The buy stops are begging to be run. Our view remains the same; sell the early rallies and buy weakness. ES 2200 is less than 0.60% away.
As always, please use protective buy and sell stops when trading futures and options.
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- In Asia 7 out of 11 markets closed higher: Shanghai Comp +0.13%, Hang Seng +0.75%, Nikkei -0.48%
- In Europe 7 out of 11 markets are trading lower: CAC -0.02%, DAX -0.16%, FTSE +0.23% at 6:00am ET
- Fair Value for Dec: S&P -7.91, NASDAQ -5.64, Dow -88.65
- Total Volume: 1.5mil ESU and 6.6k SPU traded
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