S&P Up 5 of the last 6 Sessions

on April 13, 2015

As the end of the best 6 months for stocks comes to a close (November to April), the old adage of “Sell it in May and walk away” will again be showing up on traders’ radars screens. Right now none of the above is affecting the S&P as it continues its march to new all time contract highs.

After marking its second weekly gain the S&P futures (ESM15:CME) have shaken off the weakness it saw in March and are now within 16 points of its all time, contract high at 2109.75. The S&P gained 1.7% for the week.

According to Bloomberg, it is still among the worst-performing developed-market indexes in 2015. With valuations near their highest level in more than five years, investors are looking to corporate profits for further clues on the strength of the U.S. bull market that hasn’t seen a 10 percent correction since 2011.

The big thing now overshadowing the S&P is the earnings season. There seems to be an overwhelming amount of analysts talking down the 1Q earnings. Sure the dollar and oil remain a big concern but now traders will be able to assess the damage to companies to the strength of the dollar and its effect on overseas multinational companies, and how the drop in oil has affected US energy companies. While the S&P 500 rose 1.7 percent last week, it is still among the worst-performing developed-market indexes in 2015.

S&P 500 April Options Expiration, Earnings Squeeze

I think part of the rally we are seeing is tied to a favorable April options expiration and a short squeeze going into the earnings season. The S&P had already sold off and we think traders may have gotten ahead of themselves thinking the S&P would just keep going down into the earnings.

April Expiration Study :

https://mrtopstep.com/wp-content/uploads/2015/04/ExpirationStats_4.pdf

Where has all the volume gone?

That’s a great question…Last week the ESM15’s total volume was well below historical averages. Last Monday the ESM15 (including Globex volumes) was only 980,000. On Tuesday it was 1mil and on Wednesday and Thursday it was 1.2mil per day, but Fridays volume was only 880,000 and that is with 140,000 contracts coming from Globex, knocking the total day trade volume down to 740,000 contracts.

PitBull Thursday / Friday low

So far the PitBull’s Thursday / Friday low has been holding. Our call was to look for the low and try and hold into today and Tuesday as the stats show both days as favorable. If you bought into that we still think you’re supposed to hold long positions and lighten up a little over the next few days. We would not get out of all longs but think it’s prudent to take some profits off the table if the ESM15 continues to go up.

Fairly Big Economic calendar and a ton of Earnings this week

There is a high level of economic and earnings reports this week. That could be good or bad for the S&P but we doubt that the futures will go down very much this week. Whenever you have so many reports it makes it hard to gauge what reports will be viewed as important and what won’t.

Lots of buy stops just below and above the old high…

MrTopStep has been calling out the by stops all the way up. And guess what there are a lot more to run. On Globex last night, the ESM15 traded all the way up to 2098.00. While it’s more than likely many stops were hit there are still more to come. Above 2000.70 to 2106 and above 2108.70 to 2112.50 is another very big line of by stops.

Some traders do not think volume matters…We disagree. We think volume is at the heart of every up and down move and when its this low we always get concerned.

In Asia 7 out of 11 markets closed higher and in Europe 9 out of 12 markets are trading higher this morning.This weeks economic calendar includes 21 separate economic reports, 5 T-bill or T-bond Auctions or announcements, 7 Federal Reserve bank presidents speaking and the earnings season kicks off in earnest this week. Today’s economic calendar includes a 3 and 6 month T-bill Auction, Treasury Budget, and earnings from Commerce Bancshares, Inc. (CBSH), Pep Boys – Manny, Moe & Jack (PBY), Triangle Petroleum Corporation (TPLM), and Bank of the Ozarks, Inc (OZRK).