The S&P 500 Futures and the 10 Week Grind

There is a lot of news out there pushing traders and news algos around, but the S&P futures are never far from 2100.00. With the June Quadruple Witching coming up, and the June quarterly rebalance, many investors remain sidelined in a market that many investors think is just too high to buy, and too firm to sell.

Last week’s stock market trade was overpowered by the hundreds of Greek headlines, and it looks like there is more to come as the Greek government has a decision to make…Sure, Friday’s jobs report was an important number, but the hundreds of Greek headlines seemed to overpower the jobs data. The S&P futures sold off in Globex, but short covered just before the open, and then got hit by wave after wave of program selling. At 9:49 ET and not far off the lows of the day the PitBull said:

09:49:46 PITBULL: low TRIN may indicate a bounce If you look at the MarketDelta chart of Friday’s action you will see the CME’s emini S&P (ESM15:CME) rallied from an early low of 2083.50 all the way up to 2097.25 initially and then up to 2099.50. Do a time and sales on that and you will see the ESM15 was trading 2085.00 -2085.25. The futures rallied nearly 15 handles in 50 minutes and 14.50 handles in exactly 1 hour. Pitbull didn’t make a good call; it was a great call.

There is not a lot out there we do not already know about. Both Greek and European stocks fell sharply on Friday. The Stoxx Europe 600 closed down -0.90% for a total weekly loss of -2.6%. The ATHEX fell -5.0% as the Greek government announced it was going to “bundle” its loan repayment to the IMF into one payment at the end of June. Some Greek banks fell as much at 14% as inverted yield curves continue to point to a default. That is what MrTopStep has been warning about for months, and now all the Greek government has done is kick the can to the end of the month. The ATHEX, Greece’s main stock market index, is down nearly 40% in the last 12 months making it one of the world’s worst performing index. It sounds like traders are in for another week of non-stop Greek headlines. At the same time the Shanghai Composite broke 5000 to reach its highest level since January 2008. Despite a -6.5% decline on Thursday and another 5% on Friday, the SSE rallied all the way back to higher on the day. The volatility has been extreme over the last few months. This year alone the Shanghai Composite is up 55% while the ChiNext is up a whopping 165%.

After a two week decline here in the US, the S&P futures are still up 1.7% in 2015. The futures clearly have been unable to gain traction in either direction. The ESM15 has been plus or minus 10 handles of S&P 2100 for a long time. I went back to the last 10 Fridays to see exactly where the S&P has been going, and to tell the truth, it hasn’t been going anywhere. Through all the big drops, to all the big pops, this is what it looks like.

Friday April 3, 2059.50 UNCHANGED
Friday April 10, 2095.50 +9.80 handles
Friday April 17, 2075..50 -25.30 handles
Friday April 24, 2111.70 +4.80 handles
Friday May 1, 2101.60 +22.70 handles
Friday May 8, 2108.40 +24.20 handles
Friday May 15, 2118.90 +1.30 handles
Friday May 22, 2124.60 -3.40 handles
Friday May 29, 2106.00 -15.70 handles
Friday June 5, 2092.20 -6.70 handles

That’s basically a 65-handle trading range with 6 of the 10 trading days being within 10 to 12 handles of S&P 2100.00. The non stop grind has been all about the big short covering rallies and the S&Ps inability to rally and hold above 2112.00.

The good news is, you don’t need to predict the future to trade successfully. You just need to follow whatever trend presents itself, even if it’s messy. Short-term, we know the S&P is dancing around 2100, but it does offer day traders some good trends if they wait and avoid jumping in too early. Long-term, the US economy is getting healthy and long-term index players should wait for the dips. And there are option strategies like spreads and straddles that allow you to collect premium in sideways markets. Finally, there are binary options and spreads through Nadex, which are designed to leverage sideways markets and let you start for $100. There are plenty of ways to attack the current market, but you may have to add a new page to your playbook.

In Asia 7 out of 11 markets closed lower, and in Europe 10 out of 12 markets are trading lower this morning with the two markets being up, the Russian MICEX and the Greek ATHEX. This weeks economic calendar is light; there are only a total of 15 economic releases, 9 T-bill or T-bond auctions or announcments. Today’s economic calendar starts out the week with no economic releases.

COULD HAVE BEEN WORSE

Our View: I don’t know. Maybe the ES has to go down a little more before going back up into next week’s quad-witching. Like my net changes for the last 10 Fridays it has been a total grind and now the summer is upon us. Lots of tricks coming our way too…Look, the way we see it, Friday could have been worse, and Mondays tend to be the lowest volume day of the week. Our view is, we pull back and rally, you can take it from there.

MrTopStep is not getting any older, but we are getting better. If you have taken the boot camp before, take it again. If you have never joined, MrTopStep wants you!
BootCamp sign up https://mrtopstep.com/landing_pages/bootcamp/

• In Asia 7 of 11 markets closed lower: Shanghai Comp. +2.71%, Hang Seng +0.21%, Nikkei -0.02%
• In Europe 10 out of 12 markets are trading lower : DAX -0.51%, FTSE -0.19%, MICEX +0.58% , GD.AT +0.57% at 7:00 am CT
• Fair Value: S&P -1.22, Nasdaq -1.25 , DOW 8.94
• Total Volume: 1.46mil ESM and 7.4k SPM traded
• Economic calendar: No economic releases today .
  .
  .

[s_static_display]