S&P 500 Futures: Tuesday Smash & Grab

Charts, Commentary, News, Our View, Technical Analysis, The Opening Print

Macro-Market_Profile6.29

 

Brexit this and Brexit that. After the global markets sold off hard it was not the DAX, FTSE or CAC that led the markets higher, it was the S&P 500 futures. You can say what you want about this or that, but when it comes down to it the S&P is now, and always will be, the market leader. It’s been like that in the past and that’s how it stands today.
Tuesday can be a rough day for the ‘bears,’ and yesterday’s 1.78% rally really seems to have stopped the downside sell off, but the main question is … for how long? At the end of the day the cheap money, zero interest rate trade has been a big positive for the markets, but… for how long?

It’s not uncommon after a meltdown type day like last Thursday to see some sort of relief rally. However, every rally must be considered in context. Currently the ESU16 is up 60 handles from Monday’s low, but still under the 50% retracement from last week’s high. It doesn’t feel like there will be a V-shaped recovery but it does feels as though the S&P has a steep mountain to climb to get back to 2050. After that it’s 2075, then 2100, and then new all time highs, which seem like a near impossibility after they were last seen over a year ago. Bears have the control at the moment and we will see if they can prove a lower high.

Yesterday, the futures opened the cash session higher and made an early 2018.25 high. It looked like 2025 was in the cards, but then it pulled back 12.25 handles early in the session before grinding higher throughout the day. In the final hour, large buy programs pushed the futures back above the high of day, all the way up to the 2029.00 area.
Overnight, worldwide equity markets continued to bid higher as the S&P 500 futures pushed up to 2043.50, up 15.50 handles from Tuesday’s close. The only weakness in the ESU16 was on the globex open when it traded lower by about 5 handles down to 2022.75 just as Japan was opening. After that it has rallied all night without taking much of a breather. We are seeing a pattern of lower volume on these higher days both during Globex and RTH, and with the S&P up 60+ handles from Monday’s low, I think some profit taking could be in order. Usually these types of moves see some sort of retest before sustaining higher prices. Going into today’s cash session there are some economic reports as well as book squaring into the end of the quarter to be aware of.

In Asia, 11 out of 11 markets closed higher (Nikkei +1.59%), and In Europe 12 out of 12 markets are trading higher this morning (DAX +1.89%). Today’s economic calendar includes MBA Mortgage Applications, Personal Income and Outlays, Pending Home Sales Index, EIA Petroleum Status Report, and Farm Prices.

Our View: Jeez Louise, how far can the ES go before it reverses lower? My guess is 2050. 03:52:29 TRADINGDATA2: (driley) MIM FLIP FLIP $ 27 mil to buy / all quarter end stuff so who knows? Today is another day of big eco reports, from Pending Home Sales to the MBA Mortgage applications.. Nothing comes easy. Our view remains the same. Sell the early rallies and buy weakness….after a 60+ handle rally we are looking for at least a 30 handle pullback and think that this is a good place to buy some lotto puts.
As always, please use protective buy and sell stops when trading futures and options.

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  • In Asia 12 out of 11 markets closed higher: Shanghai Comp +0.65%, Hang Seng +1.31%, Nikkei +1.59%
  • In Europe 12 out of 12 markets are trading higher: CAC +2.65%, DAX +1.89%, FTSE +2.50% at 6:30am ET
  • Fair Value: S&P -9.09, NASDAQ -10.58, Dow -109.22
  • Total Volume: 2.2m ESU and 10.8k SPU traded
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