S&P 500 projections: What the locals in the pit think

Our View, The Opening Print
BKK, Billy Kerstine
BKK (Billy Kerstine) thinks we could see a fall low of 1564 and a year-end close at 1690

Don’t believe what you hear. The floor is alive and well and the traders are still making big money. Is it like it used to be? No, but show me one business that has not changed over the last 6 years.

Views from the S&P pit

Everyone has an opinion, so with so many S&P traders in front of me every day, what better way to get a view from within than asking the locals that stand in the CME Group’s S&P pit? I asked them where they think the S&P is going to go in the fall (Sept. & Oct.) and where it will be at year end. The results are surprising. I am not going to provide the names, just the traders’ acronyms (badges).

[table] BADGE, Where will the S&P 500 go in the fall?, Where will the S&P be at year end?
EDR, Just going up, No year end expectation
PAKY, 1480, 1650
SAM, No fall selloff, 1775-1800
GSD, 1520, 1620
BV, 1545, 1670
HPJ, 1600, 1650
XMLK, 1605-1610 (lower if we break that level), 1670
VMAM, No fall selloff, 1715
JMW, No fall selloff, 1650
GME, 1585-1590, 1710
BKK, 1564, 1690
BMD, Thur 1600, 1713
REIN, 1520, 1520
DAZ, 1510, 1700
PKT, 1570, 1700
SPO, 1593, 1750-1775
ZELL, 1600, 1700
NACL, 1620, 1700
GG, 1500, 1500


What’s interesting about this is that out of 19 traders in the S&P pit, only one (PAKY) thought the S&P could trade below 1500. On the flip side, only two pit traders thought the S&P could close above 1750 at year end. Only two said the S&P would close in the 1500 handle; 12 out of 19 believe the S&P will trade into the 1500 handle, while some don’t think we will break at all.

Nine locals think we close in the 1700 and above level and 7 think we close near the 1650 level. Some say the floor doesn’t matter, but that would be like saying the Stamford, Connecticut, UBS trading floor (the world’s largest) doesn’t matter. It does; wherever there are thousands of traders all on one floor, it matters.

Will the locals be right? It’s not a big enough study to provide any real statistical data, but it is a glimpse of where traders in the S&P pit think the S&P is headed. One thing we do know for sure is the S&P will be moving this fall.

Our view: The Asian markets closed mostly higher and Europe is trading modestly lower (on vacation). For a week that is supposed to be “historically slow,” the economic calendar does not read that way. Starting today, there are 21 different economic releases, 9 T-bill and T-note announcements or auctions and 4 Fed governors speaking this week.

Last week the S&P had its first weekly rise since Aug. 2. While that may not seem significant, it is when you consider all the big talk about a market crash. The funny part of this is the S&Ps did not rally until the Fed minutes were released last week. The S&P added +0.5% last week to settle at 1661.40, up 6.6 handles on the day Friday and its first weekly gain after two weeks of losses. Meanwhile the Dow slid for its third week and its longest selloff since November.

It’s not if, it’s when …

Despite a consensus that it’s time to curb its $85 billion-a-month bond buying program, three central bank presidents speaking at the Fed conference in Jackson Hole, Wyoming, disagreed on the timing for easing the stimulus program. Last week’s mixed bag of data did not help clear things up last week either. On the good side, the fewest workers in more than five years applied for unemployment benefits and China’s manufacturing jumped. On the other side, a worse-than-expected new home sale number seemed to offset the better news.

The reason the Pit Bull and I are so close is because of one word and one word only: respect. I look to him as an extremely intelligent man with an exceptional ability to “pull the trigger.” In turn, he respects my street smarts and my ability to talk him through things when they are not going his favored way. Everyone needs a trading buddy and don’t forget it. While no one knows for sure which direction the S&P is headed, it does seem like the selling has dried up. If so, then the S&P is probably headed back up to the 1680 to 1685 level.

As always, keep an eye on the 10-handle rule and please use stops when trading futures.

Lastly, please find an hour to look at the Pit Bull speaking at Amherst College. He has been my friend for a long time but I still love hearing him talk. “A Market Wizard Speaks: Marty Schwartz speaks at Amherst College, Spring 2013.” At Marty’s request, we are offering the full video free of charge to you and the world. Few people trade as well as Marty does. Even fewer are willing to share what they’ve learned.

In Asia, 9 of 11 markets quoted closed higher (Shanghai Comp. +1.90%, Hang Seng +0.65%, Nikkei -0.18%).
In Europe, 8 out of 12 markets are trading lower: (DAX -0.19%, FTSE +0.70%).
Morning headline: U.S. durable goods post largest drop in nearly a year
Total volume: 1.3mil ESU and 8.7k SPU (mostly ETFs) traded
Economic calendar: Durable goods and the Dallas Fed mfg. survey
MrTopStep Closing Print Video

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