S&P 500 Futures; Unchanged

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7 Day Macro Profile Chart

The S&P futures closed out 2014 at 2052.50, and settled at 2049.25 on yesterday’s 3:15 CT futures close, only 3.25 points away from unchanged on the year. After a 10 handle drop on Friday’s close the futures opened lower and sold off down to 2035.25. It’s been a long year of big sell offs and big rallies but in the end, barring some unknown, the S&P is going out unchanged on the year.

3 Trading Day Left in 2015

The S&P futures are not going to 2100.00, it’s not going to 2150.00, and it’s not going to 2300.00 in 2015. With only 3 trading days left in the year it seems more likely that nothing ‘big’ happens at the end of the year. Sure, T+3 is in motion but who’s around to buy and sell? No one is! The other part, and maybe the largest part, is most of the large investment firms and funds are done for the year. Traders are taking time off and they will not be back until 2016, that’s not until Jan 4th, and even then not everyone will be trading. Clearly the lower volume has been a positive for the S&P at year end but there are still a lot of unknowns. Will the Santa Claus Rally appear (last 5 days and first 2 days of the new year)? Will the January Effect take place? To tell the truth, I think traders should expect the unexpected in 2016.

Thin to Win

MrTopStep is sticking with his ‘thin to win’ trading rule right into the end of the year. That doesn’t mean there will not be some selling late Thursday, but the S&P will have to get past ‘Turn Around Tuesday’ first.

Date                 ESH16:CME Close Volume Net Change
Dec 17 2024.75 2,108,759 – 39.00
Dec 18 1992.00 2,105,533 – 32.75
Dec 21 2015.00 1,269,272 + 22.00
Dec 22 2036.00 1,142,331 + 21.00
Dec 23 2053.00 1,003,210 + 17.00
Dec 24 2051.25 323,112 – 1.75
Dec 28 2050.00 694,593 – 1.25

In the end it’s important not to forget the big uptick in volatility that started at the end of July and has basically stuck with the S&P right into the end of the year. We knew last summer when we called for volume to drop below 750,000 ES a day that it would not stay that way. History has taught us that the S&P can only stay quiet for so long, and with crude oil moving around like it is, we do not think things will change anytime soon. Get ready for another year of big ‘Rips and Dips’ 2016 is just two days away.

Overnight, the world markets rallied and the S&P futures continued its momentum higher from yesterday afternoon as the index has now matched the Christmas Eve high. The high of December is 2105, and with three sessions remaining it will be hard to get there, but it does appear that the ESH is trying to build a floor at 2050.

Our View: Short and sweet traders; if you have not had a good year don’t make it worse by trading in thin holiday markets, and if you had a good year take some advice, keep the profits. This is not the type of trade that offers a lot of opportunities. I know, people hate to hear that, but it’s better to go out and start anew in 2016 than get chopped up. Yesterday’s sell off and rally back should set up higher prices. With volume in the ESH well under 1 million contracts (see chart above), and more people taking time off, it may be hard to be short. The CME is open for a ‘full’ day on Thursday and closed for New Years on Friday. That leaves three full days of ‘thin to win’. Our view is, if you are going to trade, be selective. Holiday markets are known for chopping traders up and there is no reason to be part of that. We lean to buying weakness with tight sell stops into the end of the year. There maybe some late selling on Thursday but just not sure who will be around.

‘S&P 500 Futures Unchanged In 2015’

ATTENTION TRADERS: Today is the last day to sign up for the MrTopStep end of the year contest. We will be taking the ad down at 12:00 am. So, please sign up today, there will be no exceptions made for late sign ups.

2015 Year End Settlement Contest

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


    • In Asia 10 out of 11 markets closed higher : Shanghai Comp.+0.85%, Hang Seng +0.36%, Nikkei +0.58%
    • In Europe 12 of 12 markets are trading lower : CAC +1.37%, DAX +1.57%, FTSE +0.38% at 5:00am CT
    • Fair Value: S&P -8.23, NASDAQ -8.07, Dow -94.95
    • Total Volume: 695k ESH and 4k SPH
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