Today started with 350k ESZ traded on Globex, trading range was 1726.75 – 1718.25. Wednesday’s regular trading hours (RTH’s), SPZ pit session trading range was 1722.50 – 1693.50 before settling at 1717.80, up 19.5 handles and up over 6% for the month!
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Today’s December S&P 500 (SPZ) pit session opened 6 handles higher to 1723.30 – 1722.80, printed an early high 1723.50, briefly breaching yesterday’s 1722.80 all-time high before slowly fading back to 1716.00 going into the European close followed by an afternoon intraday low of 1713.50, exactly 10 handles off the high. Yes, that is another MrTopStep rule – the 10-Handle Rule.
Two-thirds of yesterday’s post-Fed rally took place within 1 minute of the statement’s release. If the S&P 500 rallies 1%+ from yesterday’s close, it will make this the 4th strongest bull market in the history of the S&P 500 – Bespoke. Obviously it would be hard to measure up to yesterday afternoon’s Shock & Awe II – this time around provided by Fed Chairman Ben Bernanke and the FOMC committee – so today was spent digesting yesterday’s extension of the September gains. Also, there is chatter – Japanese bond investors are now ready to buy bonds again, but only after confirmation of Janet Yellen as the next Fed chair. In due time …
Obviously the Fed is aware and has now made the world aware of the economic crawl and stall in the weaker-than-anticipated U.S. economy – following the QE support extended over the last few years. Holding the interest rates at the lower end of the range should continue to help the housing, auto and related industries. However, job growth is necessary to support consumer confidence, as well as consumer spending, and there is plenty of wood to chop on the employment creation front.
The up Hill battle remains the administration…Washington and the pending budget/debt ceiling fight/debate is starting to fill the airwaves and can only get worse before it gets resolved. Nor can we count out Europe and the emerging markets. Some are calling the recent uptick in their economies a dead cat bounce and also are skeptical of China and its positive economic data releases of late. It is safe to say the fear is the markets are closer to the edge of the woods versus the center we have emerged from, and I think it is best to give this rally the respect it deserves and to be patient, allowing time for the two-way trade to re-enter the market. Yesterday, we touched on the possibility of a blowoff top following this month’s gains. The chatter mill is filled with most of this move is short covering from August positions shorting into September, the US, Russian & Syrian um, resolution, the Summers decision to drop out and now the Shock & Awe II from the FOMC causing the no más capitulation!
Match this up to your charts >>The early look on the closing imbalance showed (14:13) MiM – MrTopStep Imbalance Meter showing 46% to the sell side and flipped to 55% buy, but only $70M. By the MiM showed iceChat (14:42) MOC Sell $16mil and (14:46) 55% sell side $77M. At 2:47 the SPZ was trading 1716.00 area when the closing imbalance showed a small $132M imbalance to the sell side. The cash close traded 1715.40 area before settling at 1717.40, down 0.4 handle on the 3:15 futures close.
Fed yappers – voters Tarullo, Bullard and George – are all on the docket to speak on the economy & regulation tomorrow.
Shutdown sparring a warm-up for debt fight — Everyone in Washington and on Wall Street is fixated on the potential for a government shutdown in less than two weeks. But those in power and closest to the situation say a debt default is a bigger threat. That’s the thinking at the highest levels of Congress as Washington dives headfirst into a contentious fall. Read more: http://politi.co/19hw1X3
But who would have thought part 1) Did someone say something about a retest of the contract high? Shot last Thursday at 10:00CT: Brian Shepard and Jill Malandrino @TheStreet http://bit.ly/186FaiE Also, posted last Friday: Jason Carter (10:16) bull flag 120 min vs right shoulders forming. buying vol may be the way to go. See Sept vol bid into FOMC. elway (10:46) hard to sell a quiet tape with positive breadth on the friday before expiration. The breadth has remained positive since…
But who would have thought part 2) We have been posting the stats lean to the upside through the roll and the quarterly rebalance. It will be interesting how this week plays out – following the gains over the last 45 days. Coming into today [Wednesday], the S&P 500 has been up 9 of the 11 trading sessions in September and this month alone the December contract has rallied from the Friday, Aug. 30, settlement of 1624.60 to Monday morning, 9/16 new all-time high of 1700.00 just days in front of the FOMC decision.