Just because the summer is in full gear it doesn’t mean the S&P isn’t trading. After an early week selloff and some nasty price action the S&P came to life on the upside Wednesday. We said it was a “thin to win” environment, and with just 1 million ESUs traded that is exactly what we got.
Sure, you can attribute part of the rally to European Central Bank President Mario Draghi’s comments, but at the end of the day the S&P ran the sell stops under 1600 and is now working on the upside stops from 1628-1632. The S&P has been under pressure since late May when Ben Bernanke indicated that the U.S. central bank could start to “taper” its quantitative easing program. The S&P acted in kind and sold off from the 1640-1650 level down to 1550 and is now bouncing back up.
We are going to keep this short and sweet. We suspect that most people are going to take a pass on trading and continue the Fourth of July holiday right into the weekend. For those of you who will be trading, we think the markets will go quiet after 10:00 CT and stay that way till the close. Words to the wise: If you make some money this morning, book it. If you’re down a little, keep it a little and get out. It’s almost impossible to trade out of a loser on days like these. And you don’t have to. In the words of Jimmy Buffett, “Come Monday, it’ll be all right …”
Our view: Asia closed higher across the board (Nikkei +2.08%). In Europe 9 out of 12 markets are trading modestly higher. In addition to this morning’s job report, today the banks report their midyear stress test results. According to the Labor Department, economists expect employers to added 165,000 new jobs last month, which is right around what was added in May. Like last month, we expect the number to come in higher than expected. Some of the most recent data has indicated that hiring remained solid (ADP 188,000 jobs in June) and some states are paring back emergency unemployment benefits because of the sequester. As we go into today’s jobs number we are concentrating on the old highs made in May around the 1632 area with 1636 being key resistance. What was once support is now resistance. Our view is to sell a sharply higher gap up open or the first 2-3 handle rally above if we see Globex volume of 400+. This is just a day trade and not a long term view. Get in and get out, folks…
As always, keep an eye on the 10-handle rule, and please use stops when trading futures, so you can live to trade another day.
- It’s 8:15 a.m. and the ESU is trading 1622.25, up 13.25 handles; crude is up 56 cents at 101.80; and the euro is down 124 pips at 1.2893.
- In Asia, 10 out of 11 markets closed higher (Shanghai Comp. +0.05%, Hang Seng +1.89%, Nikkei +2.08%).
- In Europe, 9 out of 12 markets are trading higher (DAX -0.62%, FTSE +0.28%).
- Today’s headline: “U.S. Stock Futures Rise on ECB Before Employment Report”
- Total volume: 1mil ESU and 2k SPU
- Economic calendar: Employment situation, jobless claims, midyear stress tests due
- Fair value: S&P +14.19, NASDAQ +25.69