Dow Rises Over 1,000 Points In 6 Sessions

Commentary, News

Index Futures Net Changes and Settlements:

Contract Settlement Net Change +/-%
S&P 500 (ESM18:CME) 2718.75 +22.75 +0.83%
DowJones (YMM18:CBT) 24,692 +190 +0.76%
Nasdaq 100 (NQM18:CME) 6965.00 +69.00 +0.99%
Russell 2000 (RTYM:CME) 1605.20 +6.80 +0.42%

Foreign Markets, Fair Value and Volume:

  • In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.36%, Hang Seng +1.02%, Nikkei +1.16%
  • In Europe 8 out of 13 markets are trading lower: CAC -0.29%, DAX -0.24%, FTSE -0.06%
  • Fair Value: S&P -0.79, NASDAQ +5.03, Dow -22.16
  • Total Volume: 1.16mil ESM & 745 SPM traded in the pit

Today’s Economic Calendar:

James Bullard Speaks 8:30 AM ET, Import and Export Prices 8:30 AM ET, Consumer Sentiment 10:00 AM ET, and the Baker-Hughes Rig Count 1:00 PM ET.


S&P 500 Futures: #ES Up 133.75 Handles In Six Sessions

The S&P 500 futures (ESM18:CME) have close higher six days in a row. Since breaking its 200 day moving average and trading down to 2391.25, the ES has rallied 133.75 handles (points). While the first quarter earnings have played a big part in the rally, so has the global macro economic picture. It was only a few weeks ago that the Facebook debacle made the news and tech stocks were getting slammed, and concern about the Trump investigations and high profile people leaving the administration, but as of yesterday, FB traded above the price before it sold off.

Thursdays trade started with a Globex range of 2692.75 to 2706.00, on volume of 140,000 contracts. The first print off the 8:30 CT futures open was 2704.25. Like Wednesday, after the ES opened, the futures did some early back and fill from the 2702.50 level to 2709.00, had one last drop below the VWAP down to 2703.50 at 9:21 AM, and then in came several big buy programs that pushed the future all the way up to 2725.25 at 12:15.

After the high, the ES sold off down to 2704.75, rallied back up to 2721.25, and then sold off down to 2713.00. The next move was back up to 2722.50 at 2:00. As the MiM went from $77 million to sell to $340 million to sell, the ES sold off down to 2716.50. On the 2:45 cash imbalance the ES traded 2718.75, then traded 2721.00 on the 3:00 cash close, before going on to settle at 2718.50 on the 3:15 futures close, up +22 handles, or +0.87% on the day.

In the end, the bulls owned the tape, but I have one question, where has all the volume gone?


Top Sectors for Surviving the “Worst Six Months”

From Stock Traders Almanac:

Today we are not going to bother debating whether one should actually sell in May or not. Instead, let’s focus on what tactical changes can be made in portfolios to take advantage of what actually does work during the “Worst Six Months” while either shorting or outright avoiding the worst of the worst.

In the following table, the performance of the S&P 500 during the “Worst Six Months” May to October is compared to fourteen select sector indices or sub-indices, gold and the 30-year Treasury bond. Nine of the fourteen indices chosen are S&P Sector indices. Gold and 30-year bond are continuously-linked, non-adjusted front-month futures contracts. With the exception of two indices, 1990-2017, a full 28 years of data was selected. This selection represents a reasonably balanced number of bull and bear years for each and a long enough timeframe to be statistically significant while representing current trends. In an effort to make an apple-to-apple comparison, dividends are not included in this study.

Using the S&P 500 as the baseline by which all others were compared, seven indices outperformed during the “Worst Six Months” while nine underperformed based upon “AVG %” returned. At the top of the list are Biotech and Healthcare with average gains of 9.00% and 4.74% during the “Worst Months.” However, before jumping into Biotech positions, only 23 years of data was available and in those years Biotech was up just 52.2% of the time from May through October. Some years, like 2014, gains were massive while in down years losses were frequently nearly as large.

Runner-up, Healthcare with 28 years of data and a 66.2% success rate is probably a safer choice than Biotech. Its 4.74% AVG % performance comes by way of one less loss in five additional years of data and just two double-digit losses, both in bear markets during 2002 and 2008.

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As always, please use protective buy and sell stops when trading futures and options.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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