The Asian markets closed modestly higher and Europe is trading modestly lower. This week’s economic calendar starts out slow with no numbers today and San Francisco Federal Reserve Bank President John Williams speaking to the NABE conference in San Francisco.
Tuesday has two numbers and a 2-yr note auction. Wednesday we have the MBA purchase applications, wholesale trade and a 10-yr note auction. And this is switch week: on Thursday the December (Dec) contracts will be trading in the front month.
The S&P rollover will start in earnest this week. The open interest in the big S&P contract that is traded in the pit has dropped from a high of over 650,000 contracts down to 185,000 as of today. The lower open interest is slowly but surely killing the S&P open outcry rollover, as more traders move to Globex to roll positions.
Lots of ups and downs going on, also known as volatility. The Dow broke a 4-week losing streak last week, but the big question is, are people getting sucked back into the long side again?
The S&P has rallied 40 handles from its 1625 low. You have to think some shorts covered or got stopped out during the latest run-up. That said, the funds are still willing and eager to sell the S&Ps. Mondays are never very good for S&P rallies, so we lean to selling the rallies with tight stops. Big resistance can be found at 1668 to 1673 (1673 also fits the MrTopStep 10 Handle Rule.)
So keep an eye on the 10-handle rule and be especially careful to use stops in a volatile time like we’re heading into.[pullquote]Marty the PitBull Schwartz speaking at Amherst College.[/pullquote]
- In Asia, 11 of 11 markets closed higher: Hang Seng +0.57%, Shanghai Comp. +3.39%, Nikkei +2.48%.
- In Europe, 6 of 12 markets are trading lower: DAX -0.09%, FTSE -0.25%.
- Morning headline: “Asian Stocks Push Global Shares Higher, Congress Returns”
- Total volume: 2.56 million and 8.3k SPU (mostly ETFs) traded
- Economic calendar: John Williams speaks and consumer credit