5 Day chart of the S&P futures: The ESM15 traded up to 2132.00 in Globex last night and is trading 2131.00 at 6:30 AM CT. The front month ESM15’s total volume was only 915,000 contracts with 170,000 of the day’s volume coming from Globex. MrTopStep thinks volume in the index will continue to drop as the markets move into the summer months.
Monday’s trade started where Friday left off in the S&P 500 futures: making new all-time contract highs. At the end of the day the S&P(ESM15:CME) and Dow futures traded (YMM15:CBT) to new all time highs. The (ESM15:CME) traded up to 2128.75 and settled at 2125.90, up 7 handles on the 3:15 CT futures close. and the Dow futures (YMM15:CBT) finally took out its old high and traded up to 18291 and settled at 18259, up 30 points on the day. The Nasdaq futures (NQM15:CME) traded up to 4517.75 and settled at 4507.25, up 18.5 points, just shy of a record high. The S&P is in the 6th year of its bull market run and is up two fold since making its 2009 credit crisis lows, and is now up over 200% in 2015.
The buyers showed right back up where they left off last Friday, pressing the S&P futures into its 9th new contract high in 2015. While the Bull may not be running as fast as it has over the last several years, it is back to making new highs. As I have pointed out on many occasion in the last few months, the risk is to the upside, and with the lack of any real pull back, and the stocks so high, the public has been scared out and not willing to jump in at such lofty prices. Yesterday the PitBull and I were talking and he said he was amazed how the S&P keeps going up. I told him that I believe the rally is, and has been, directly related to the Fed zero borrowing cost and the idea that not only will there be no rate hikes in September, there won’t be any this year.
BUBBLE, BUBBLE TOIL and TROUBLE
The bidding for Pablo Picasso’s “Women of Algiers,” started out at $100 million dollars and sold for a record $179 million. Rents prices in Chicago, NY and Los Angeles and several others cities in the US are exploding. Horses at auction that are for sale for $500,000 are going for $1 million. Multi-million dollar apartments and homes going for record high prices and the S&P 500 keeps going up and up and up. Our saying about the S&P, “prices are too high to buy and too firm to sell,” goes for just about everything. Things are getting bubbly but it doesn’t seem to matter.
After the 2007 credit crisis wiped out billions in market cap, and wiped out millions of people’s retirement accounts, the big buck spending is back and it seems like people are more “flush” than they have been in many years. As many of you know I have maintained an overall bullish view of the stock market since 2009. Sure I fell off track a few times but not in a few years. I have stuck with my view that zero borrowing costs trump all, but even I am starting to wonder how long this can go on.
Whats changed?
So far in 2015 the only thing that has changed is the rate at which the S&P is going up. It’s been more of a struggle this year than in years past. As money moves back and forth between Europe and the US, it’s starting to look like the public is becoming more comfortable with the high price of the S&P. Still, the word ‘complacency’ comes to mind, and the question of how much longer the rally can go? For me it’s simple math; as long as the S&P is going up… we want to go for the ride.
In Asia 6 out of 11 markets quoted closed higher (Shanghai Comp. +3.13%), and in Europe 9 out of 12 markets quoted are trading higher this morning (DAX + 1.75%). Today’s economic and earnings scheduled starts with Housing Starts, Redbook and earnings from DKS, WMT, HD, RRGB, TJX, ADSK, CSC, HEI, SSI, DY, ETSY, ADI, NDSN, CISG, WBAI, AINV, DL, LEJU, QIHU, IJ, VOD, HNR, CMCM, NQ, ALOT, and VSAT.
Complacency Killed the Cat
Our View: Bert Dohmen thinks we are close to some type of exhaustion point and I do not disagree. Today’s economic releases are Housing Starts and Redbook, and Wednesday is just as empty; Charles Evans speaks, MBA Mortgage Applications and the EIA Petroleum Status Report and the FOMC Minutes. It looks, and has the feeling of a slow week. I am not a big theory guy but I am concerned again about the volume.
Total volume in the ES, including Globex, was less than 1 million contracts traded and it’s the middle of May. The colleges are letting out and grade schools will soon follow. What’s that mean? According to the Stock Trader’s Almanac, traders tend to cut back, take money off of their accounts to go on a vacation, and when that hits, I think the daily volume of the ES will drop under 900,000 contracts a day traded, including Globex. It’s not going to be a pretty picture. Less will be better for algos that want to push a thin market around…
Our view is for more of the same grind. While we still think higher prices we are getting concerned that the S&P may hit some exhaustion point.
- In Asia 6 of 11 markets closed higher : Shanghai Comp. +3.13%, Hang Seng +0.37%, Nikkei -0.68%
- In Europe 9 out of 12 markets are trading higher : DAX +1.75%, FTSE +0.33%, MICEX -1.30% , GD.AT +3.32% at 6:30 CT
- Fair Value: S&P -3.20 , Nasdaq -1.40 , DOW -35.81
- Total Volume: LOW 900k ESM and 3.3k SPM traded
- Economic calendar:Housing Starts and Redbook .
[s_static_display]
No responses yet