Tuesday more of the same; be long, but careful

Our View

ES 09-13 (5 Min)  7_22_2013The Asian markets closed sharply higher and Europe is rallying as well. Let’s stick to the basics: Billions are moving out of bonds and into stock. In this type of “thin to win” trade it’s very easy for the cash buyers to move the S&P. As of today’s open the S&P 500 futures have been up 14 out of the last 15 trading days for a total gain of 91 handles.

In all honesty, the best comparison to what’s going on is the 1999-2000 tech bubble, but back then the Fed wasn’t supporting the markets with $85bil a month in bond repurchases. We all know when the party ends it won’t be good, but the S&P has rallied 140 handles from its 1553 low. The shorts have been run over so hard they are spinning. Our view is for more of the same. You can sell the early rally and buy weakness, but the overall trend and the money trade is the buy side.

There are buy stops all the way up to 1707. The S&P is in need of some back and fill but there’s no stopping it now.

  • It’s 8 a.m. and the ESU is trading 1693.50, up 3.25 handles; crude is down 67 cents at 106.27; and the euro is down 8 pips at 1.3184.
  • In Asia, 11 out of 11 markets closed sharply higher (Shanghai Comp +1.95%, Hang Seng +2.33%, Nikkei +0.82%).
  • In Europe, 11 out of 12 markets are trading higher (DAX +0.33%, FTSE +0.33%).
  • Today’s headline: “China moves send world shares higher; dollar softens”
  • Total volume: 0.9mil ESU and 3.47k SPU
  • Economic calendar:  ICSC-Goldman store sales, Redbook, FHFA house price index, Richmond Fed manufacturing index, T bill and note auctions
  • Fair value: S&P 1690.28; NASDAQ 3048.28
  • MrTopStep Closing Print Video: http//dev.mrtopstep.com/2013/07/mrtopstep-closing-print-07-22-2013/

The S&P futures have closed higher 14 out of the last 15 trading days and are up 91 handles.

Date Close Net Change
7/1/2013 1606.75 7.5
7/2/2013 1607.25 0.5
7/3/2013 1609 1.75
7/5/2013 1627.25 18.25
7/8/2013 1635.5 8.25
7/9/2013 1645.5 10
7/10/2013 1648.5 3
7/11/2013 1670 21.5
7/12/2013 1670.25 0.25
7/15/2013 1677.5 7.25
7/16/2013 1671.25 -6.25
7/17/2013 1675.5 4.25
7/18/2013 1680.5 5
7/19/2013 1689.5 9
7/22/2013 1690.25 0.75

Total + 91  handles

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