I knew early on that most people thought the S&P (ESM15:CME) was going to take out the buy stops above 2100. Remember I have over 20,000 people following me on Twitter, so I do have a feeling for what the public is thinking. Everything looked like the ESM15 was going to run the stops, and it did, it just didn’t go as far as most people thought it would.
Why did the ESM15 close down 9 points? I’ll tell you why. First, everyone thought the S&P would go blowing through 2100 and second, the ES used up all its buying power after it rallied from the open to the highs in the first few minutes. It was all buy stops and buy programs in the early going and then all sell programs and sell stops after. Sound familiar?
Buy Europe / Sell US
Look – I don’t know for sure what’s going to happen to the S&P, no one does. But I still insist that the S&P is not going up or down sharply. Think about all the free money floating around in the EC bond buying program. I hate to say it, but the ES has fallen out of favor while the European and Asian bourses are hitting new contract highs every day.
I also still believe that most of this year’s gains will come in the final quarter. In the meantime you can’t get overly negative into the declines because the Fed has a massive put on to keep the market supported. By the same token, you can’t get overly bullish after a big rally. It’s a premium seller’s dream come true.
Retail Sales and Bank Earnings Day
In Asia 6 out of 11 markets closed higher and in Europe 9 out of 12 markets are trading lower. Today’s economic calendar includes PPI-FD, retail sales, Redbook, NFIB Small Business Optimism Index, Business Inventories, Narayana Kocherlakota speaks, and earnings from BTO, ARMH, ABG, BHI, EAT, CP, CS, DD, GCI, GPC, HOG, ITW, JAKK, KSU, LMT, MAN, MLNX, EDU, PLD, SAP, SBNY, SNV, AMTD, TCK, TRV, UA, UTX, VZ, WIT, ATC, AMGN, CMG, EWBC, FTI, GILD, HLIT, HA, ILMN, IRBT, MANH. NBR, PFPT, SYK, SMCI, URI, VASC, VMW, YHOO, and YUM.
At the end of the day the S&P is running in circles. As more money moves from the US to European stocks the S&P has been left in limbo, running sell stops and then running buy stops but not actually going anywhere. Will it be like this all year? I doubt it, but I do not see a real change coming anytime soon.
Our view: We have another big day of earnings and economic reports to get past this morning but after that I think the ES starts going back up a bit. We lean to selling the early rallies and buying weakness. Today’s stats show the Tuesday of the April options expiration up 18 / down 7 of the last 25 occasions.
April Expiration Study:
https://mrtopstep.com/wp-content/uploads/2015/04/ExpirationStats_4.pdf
S&P 500 Futures: Never Does What Most People Want It To Do, When They Want It
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed higher: Shanghai Comp. +0.34%, Hang Seng -1.62% , Nikkei +0.02%
- In Europe 9 of 12 markets are trading lower: DAX -0.50%, FTSE +0.16%, MICEX -1.06%, Athens GD.AT -1.70% (at 7:00 am CT)
- Fair value: S&P -6.87 , Nasdaq -8.15 , Dow -85.59
- Total volume: LOW 1 mil ESM and 4k SPM traded
- Economic schedule: PPI- FD, retail sales, Redbook, NFIB Small Business Optimism Index, business inventories and Narayana Kocherlakota speaks.
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