What can be said? After the S&P 500 futures (ESM15:CME) rallied in Monday’s session as much as 40+ handles from Friday’s NFP disappointment lows, on a low-volume session coming off a U.S. holiday, and on a day when most of the Asian and European markets were closed, we expected some back and fill, although not quite this much.
Monday’s high fell short of last week’s 2081.50 high and in turn the Tuesday Globex session saw a low of 2070.25 before trading higher in the regular session, proceeding to break the prior week’s high while trading up to 2082.75, only to trade back down below 2065.00 overnight Wednesday before trading to 2080.25 yesterday and retreating to 2067.25 early this morning. Currently it has traded back to the 2077.50 area.
MINUTES
Yesterday’s FOMC minutes seemed to be digested by analysts and traders in different ways, and in either event, did nothing to initiate any real market move. With this we are starting to see the range getting tighter while making a series of higher lows and lower highs on mostly lower volume. It feels like it can roll over at any moment but at the same time is close to breaking higher.
Right now there’s a feeling that summer could come early again this year, as last year volume slowed down in May as the historically weak month offered no real pullback, also offering concern that volume is lower this year than it was this time last year. However, a closer look reveals that this year’s price action is very similar to last year’s when the S&P 500 futures maintained a range for the first four months of the year that was mostly set in January. In fact 2014 did not break the early range and start expanding new highs until the latter part of May.
Earnings season did kick off yesterday with some concerns about recent dollar strength weighing on profits, Alcoa beat their earnings expectation but fell short on revenue, Alcoa (AA) looks lower this morning, currently down over 2.5% in premarket. This morning Goldmans Sachs suggested that some stocks could see increased volatility.
For now, it’s clear this 2060-2080 area needs to play out, and until it does there is no need for bulls or bears to fall in love with their positions. This week, fading the morning and afternoon moves has seemed to work best.
In Asia 7 out of 10 markets closed lower and in Europe 11 out of 12 markets are trading higher this morning. On today’s economic calendar: Chain store sales, jobless claims, wholesale trade, EIA natural gas, 30-year bond auction and earnings from Constellation Brands (STZ), Ruby Tuesday (RT), PriceSmart (PSMT), and Synergy Resources (SYRG).
Our view: With the exception of Good Friday the S&P has been up a day, down a day for the last 4 or 5 sessions. There are a decent amount of earnings and economic releases out this morning, but after that I think the ESM15 wants to go higher. The next set of buy stops start above 2079.70 and initially run to 2086. Above 2089.00 is all buy stops up to 2095.00. Our view is for a 2-way trade with a bias to the upside. Buy weakness.
April Expiration Study:
https://mrtopstep.com/wp-content/uploads/2015/04/ExpirationStats_4.pdf
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 7 out of 11 markets closed lower: Shanghai Comp. -0.93%, Hang Seng +2.70% , Nikkei +0.75%
- In Europe 11 of 12 markets are trading higher: DAX +0.58%, FTSE +0.85%, MICEX -1.51%, Athens GD.AT +0.39% (at 7:00 am CT)
- Fair value: S&P -7.04, Nasdaq -8.03 , Dow -85.43
- Total volume: LOW 1.2mil ESM and 3.5k SPM traded
- Economic and earnings schedule: Chain store sales, jobless claims, wholesale trade, EIA natural gas, 30-year bond auction and earnings from Constellation Brands (STZ), Ruby Tuesday (RT), PriceSmart (PSMT), and Synergy Resources (SYRG).
[s_static_display]
No responses yet