S&P 500 Futures; Ho Ho Ho, or Ho Ho Hoax?

Commentary, News, Our View, S&P 500, The Opening Print, Video

A screen displays stock charts while a trader works at his post on the floor at the New York Stock Exchange, May 30, 2013. REUTERS/Brendan McDermid

The S&P 500 futures traded down to 1983.25 early last week, then made a low of 1991 in the final minutes of trade last Friday. During Sunday night’s Globex session, a low at 1995.25 was made, followed by a 1995.75 low during Monday’s cash session, setting up the third higher low since last Monday. The S&P has had a tough time since it made its 2015 high back on May 19th, but that doesn’t mean that Santa isn’t coming to town, he’s just taking his time getting here. At the end of the day, and after a lot of chopping up and down, the S&P futures (ESH16:CME) traded higher going into the close and settled at 2018, up 23.25 handles, or +1.00%. The Dow Jones futures (YMH16:CBT) closed up 179 p0ints to 17206, up 1.0%, and the Nasdaq 100 futures (NQH16:CME) closed up 61.75 points to settle at 4571.75, or up + 1.35%. At 12:10:10 ET I put this out, If you do a time and sales you will see I was right:

TRADINGDATA2: (driley) I think the ESH is at or near the early low.

The reasons we did not think the S&P was going to go down hard were two fold. The first part is, after a very weak close on Friday there was no downside follow through on Sunday night or early Monday. The second part is, that despite the rally and sell off, the ESH did some back and filling off yesterday’s lows, but the main part was the big rally on the close.

Six Trading Days Left in 2015

As more traders take time for the holidays, MrTopStep’s trading rule ‘thin to win’ should take over. Including today there are 2 ½ trading days left in the week, and next week there are a total of 3 1/2 trading days, with the exchange closed on Friday. That is a total of 5 full trading days and two half days.

This has been a challenging year, and in November/December when the volumes typically decrease and the price ranges begin to chop, this year they have done anything but. Year over year, November volume was 33% higher this year while having a 5% greater range, and this year’s December volume has nearly met last years total volume for the month and will likely exceed that mark by Christmas. This year has seen many 1% daily swings, according to the Wall Street Journal, “for the year, the Dow has now turned in 70 sessions with swings to that degree, and that’s almost double the count for last year. It’s also the most since 2011, when there were 89 such days.”

Shawn Langlios of MarketWatch reported: “This has been an insane year,” Michael Gayed, portfolio manager at Pension Partners, said. “The speed with which volatility has changed this year has been nothing short of incredible, and largely under-appreciated by market participants.”

As the year comes to close the stats are strong, 64 of the last 80 years the final 7 sessions of the year have produced a gain for equity indexes, however two of the last three years this period has been negative for the S&P 500, including last years -0.67% loss. Fortunately for bulls the good news is the markets have not closed the final seven session down three of the last four years.

As for this week, the stats are mixed until Christmas Eve, where the day before Christmas has been higher about 2/3rd of the time over the last 25 years, accounting for some strong gains.

performance chart

In Asia, 9 out of 11 markets closed higher (Shanghai Comp +0.26%), and in Europe 6 out of 12 markets are trading modestly lower (DAX -0.39%). Today’s economic calendar includes GPD, Corporate Profits, RedBook, FHFA House Price Index, Existing Home Sales, and Richmond Fed Manufacturing Index.

Get Your Rally Hats On

Our View: We are sticking with the idea that the S&P is going to start to go back up. Unless there is some type of economic hiccup the ESH16 should be on its way back up to the 2050 to 2070 level. Does it do it all in one day? That’s usually the case, but there are still 6 trading days left in the year, and we do not think they will all be up. We are going to keep this simple; our view is to buy weakness / pull backs and look for TurnAround Tuesday. It’s time to shake some shorts out…

‘S&P 500 Futures; Ho Ho Ho or Ho Ho Hoax?’

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


    • In Asia 9 out of 11 markets closed higher : Shanghai Comp. +0.26%, Hang Seng +0.18%, Nikkei -0.16%
    • In Europe 6 of 12 markets are trading modestly lower : CAC -0.28%, DAX -0.39%, FTSE +0.40% at 5:00am CT
    • Fair Value: S&P – 9.01, NASDAQ -8.95, Dow -95.14
    • Total Volume: 1.27mil ESH and 2k SPH
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