S&P 500 Futures: Trump Alert, He Cant Stay Off Twitter

Commentary, News

Social media is supposed to be for kids, or selling products, not the president of the United States banging away on Twitter all day. There has never been a time in history when a sitting president has used social media like President Trump is doing, and for most people, it doesn’t sit very well.

While Trump did post some early tweets, there was one in particular flying around Wall Street that Gary Cohn had resigned. The S&P 500 futures (ESU17:CME), and the Nasdaq 100 futures, were already under selling pressure on the 8:30 ct futhes open, but when the rumor that Cohn had quit hit on Twitter, both markets nosedived, and the ES sold off 2449.75 in less than 20 minutes. After the rumor was denied by various news sources, the ES and NQ started to move back up. At 10:30 CT total volume was 935,000.

After the ES traded back above the vwap at 2458.00, the NQ started to trade down again, and the ES sold back of. By 1:00 the ES traded down to 2440.75, and the NQ sold off all the way down to 5825, down 1.00% and down 1.5% accordingly, and took out last Sunday’s night’s Globex lows. The PitBull always warns about seasonal weakness from the last week of July to the the third week of August, but the with President Trump losing all the CEO’s and tweeting all day, it only added to the weakness. Around 1:30 the ES made a new low at 2438.75 just as the MiM started to show $818 million to buy.

Political Jitters

It was a day filled with tweets and sell programs as the president continued to support his stand on the violence. Below are a few of his tweets:

After a ‘small’ bounce (every one failed all day) the MiM when to over $1 billion to buy, both the ES and the NQ continued to make news lows. The ES traded down to 2432.75, and the NQ double bottomed at 5808.50.

During the last hour, selling accelerated into the closing bell, with the market closing on the session lows.

Dow Ends 63 Day Streak Without A 1% Move

In the end, the markets were already weak when the rumors started circulating that Gary Cohn, President Trump’s National Economic Council director, was resigning. The S&P was already off to a weak start, with retail and technology companies leading the way lower. Every sector in the S&P fell, and every stock in the Dow closed lower. Despite the rumor about Cohn quitting being refuted, it was already too late. The markets could not catch a bid, and the selling continued.

After the S&P broke through its 50 day moving average at 2450, it was one sell program after another. UBS’s Art Cashin wrote from the floor of the New York Stock Exchange that “The market nervousness is not related to Cohn alone, the angst is that if he left who else might go. Even those who think little of Trump repeat ‘at least he’s got talented people around him.’ The fear is of a general walkout.” You could actually feel the fear of something bigger happening.

While You Were Sleeping

Overnight, equity markets in Asia and Europe were weak across the board, following suit with yesterday’s action in U.S. markets.

The S&P 500 futures has recently found some strength, after trading down to 2424.25 just before 4:00am CT this morning. As of 7:15am CT, the last print in the ES is 2432.00, up +2.50 handles, with 282k contracts traded.

In Asia, 8 out of 11 markets closed lower (Shanghai +0.02%), and in Europe 12 out of 12 markets are trading lower this morning (FTSE -0.88%).

Today’s economic calendar includes Consumer Sentiment (10:00 AM ET), Dallas Fed’s Robert Kaplan Speaks (10:15 AM ET), Baker-Hughes Rig Count (1:00 PM ET).

Our View

It definitely looks like the Trump rally is over. No one wants to work with him. Why he is self destructing when he has so many good people around him is very hard to understand. The other thing is, why did he keep pounding away on Twitter?

Our view is that we see some type of bounce. Will it hold? Not sure, but if the headlines continue as they did yesterday, it will be very hard for the S&P to hold up. 2420 is a big level, under there it’s 2400.00, and then 2375.00. Not saying this will happen right away, but the markets have been overdue for a pullback / sell off, and it looks like that’s what we are seeing.

PitBull: clv osc -27/5 turns up on a close above 4662; esu osc -8/-3 turns up on a close above 246351; vix osc 7/13 turns down on a close below 1254.

Market Vitals for Friday 08-18-2017

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

  • In Asia 8 out of 11 markets closed lower: Shanghai Comp +0.02%, Hang Seng -1.08%, Nikkei -1.18%
  • In Europe 12 out of 12 markets are trading lower: CAC -0.97%, DAX -0.33%, FTSE -0.88%
  • Fair Value: S&P -1.05, NASDAQ +3.50, Dow -23.01
  • Total Volume: 2.23mil ESU, and 1.2 SPU traded in the pit
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