S&P 500 Futures; CNBCs Bouroudjian says ES 2300, MrTopStep says Sell

During the market sell-off that began in August, and the continued weakness lasting through September, many pundits, analysts, and so-called traders appeared on CNBC, with several of them seeming to make near catastrophic calls ranging from suggestions that a multi-year top was in and the bull market being over, even some suggesting that a new bear market was beginning.

What followed their “analysis” was one of the strongest Octobers the equity indexes experienced in HISTORY! As the bearish sentiment had peaked at near record levels, sell stops were run, and the true smart money began to go long. By the time these CNBC commentators caught up, the index futures were 15% from their August lows and just 1% from the all time high.

So what do you do when you are wrong by 15%? The answer is FLIP! At least according to the strategy now being displayed by pundits who now seem to be moving quickly into the bull camp, leaving me wondering and scratching my head asking “where were they 250 handles ago?”

Too Little Too Late?

What’s hard to stomach is that while many serious traders learn to ignore much of the noise on CNBC, there still is a mass public of casual investors who watch these commentators. Investors who somehow believe, like most people would initially, that these individuals are on television and so they must be credible, they must know, and they must be traders/investors. Under this influence, many mom’s & pop’s called their financial advisors and told them to sell, fearing the worst of these pundits comments. Now they find themselves having missed one of the best performing times in market history.

The 15% Bull Market The Public Missed

I know we at MrTopStep mentioned it before, and maybe some are tired of it, but you know what? WE are tired of it! The public should be privy to the same flow of information as any investment manager or hedge fund. THAT’S why we started MrTopStep in the first place! Fighting for the little guy. Danny made a name for himself on the floor as the go-to-guy for order fills. Why? Because he treated a single lot order the same as he would a thousand lot order. Everyone is important, every customer is important, and at the end of the day, whether we are 1 lot traders or 20 lot traders, we are all trying to make a day’s pay, preserve capital, and take care of our families.

We are calling for social responsibility in information flow and broadcasting. We at MrTopStep make every effort, and when we are wrong, we tell you about it. The last thing we want is to be wrong and pretend as though it doesn’t matter, or that people are not listening.

Recently on CNBC I heard commentators pumping the bulls, with one particular analyst suggesting 2300 by years end on the S&P 500. I don’t have a problem with an upside target, but where is the responsibility of coming on after being wrong for the last 275+ handles, and then saying it’s time to buy? It’s a day late and thousands of dollars short.

Tuesday afternoon, Danny mentioned how the “CNBC Bad Call Sentiment is bullish”, and that “the next 30-40 handles will be to the downside.” At the moment of the post the ESZ15 was trading at 2104. Yesterday the low was at 1990.50. That’s nearly half the 30 handles on the lower end of that call, but it’s a long week, and there’s a lot of trading left, including NFP.

The message is that it is completely possible the markets will be higher by years end. Danny’s year end call is still higher, but let’s not fill the bus when the S&P has shot straight up like an arrow. From the television pulpit, don’t pump up the average small investor about a bull rally that is coming at years end without telling them what they have already missed in recent weeks. MrTopStep maintains that there will be a buying opportunity in November, but not at the top. Let it go lower, test some key areas, and then resume higher. At the end of the day we are rewarded for patience.  It’s always easier to buy the dip then it is to buy the high tick.

“He who is prudent and lies in wait for an enemy who is not, will be victorious” – Sun Tzu

In Asia 7 out of 11 markets closed lower (Shanghai Comp. +1.83%), and in Europe 6 out of 11 markets are trading higher (DAX +.76%). Today’s economic calendar includes the Weekly Bill Settlement Chain Store Sales, Challenger Job-Cut Report, Jobless Claims, Productivity and Costs, Gallup Good Jobs Rate, Patrick Harker Speaks, William Dudley Speaks, Stanley Fischer Speaks, Bloomberg Consumer Comfort Index, EIA Natural Gas Report, Charles Evans Speaks, 3-Month Bill Announcement, 6-Month Bill Announcement, 52-Week Bill Announcement, Daniel Tarullo Speaks, Dennis Lockhart Speaks, Treasury STRIPS, Fed Balance Sheet, Money Supply, and earnings from Cinemark Holdings Inc (CNK), Duke Energy Corp (DUK), Martha Stewart Living (MSO), Molson Coors Brewing Co (TAP), Re/max Holdings Inc (RMAX), Stamps.Com Inc (STMP), Walt Disney Co (DIS), and others…

Day Before NFP

Our View: It’s the day before NFP. Globex volume thus far is just over 150,000. Today’s calendar is much more full, but ultimately we expect for the light trade to remain into tomorrow’s non-farm payroll at 7:30 CT. Yesterday traded inside of Tuesday’s 2089 – 2110.25 range, and I expect today to pretty much do the same. The S&P could trade a couple handles outside of that range, but with low volume, we have to expect more of the same. Have to take a profit in this environment when you have them while timing entries precisely, that’s the nature of trading the range. With consecutive sessions having a low of 2089, 2090.50, and a globex low of 2091.50, there is potential for some sell stops below that 2089 area, but I tend to think that if they were to be run, it would have been overnight.

R2 2116.00
R1 2105.25
PP 2098.00
S1 2087.25

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. +1.83%, Hang Seng -.01%, Nikkei +1.00%
• In Europe 6 out of 11 markets are trading higher : CAC +.83%, DAX +.77%, FTSE -.55% at 6:00am CT
• Fair Value: S&P -5.37 , NASDAQ -5.91 , Dow -72.69
• Total Volume: 1.54mil ESZ and 6.4k SPZ

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