Foreign Markets, Fair Value and Volume:
- In Asia 10 out of 11 markets closed higher: Shanghai Comp +1.30%, Hang Seng +1.66%, Nikkei +1.29%
- In Europe 7 out of 12 markets are trading higher: CAC -0.08%, DAX +0.55%, FTSE +0.30%
- Fair Value: S&P +1.63, NASDAQ +11.48, Dow -9.35
- Total Volume: 1.1mil ESH & 694 SPH traded in the pit
Today’s Economic and Earnings Calendar:
Redbook, 8:55 a.m. Eastern; Richmond Fed Manufacturing Index, 10 a.m. Fedspeak: Charles Evans Speaks, 6:30 p.m. Earnings: Fifth Third Bancorp (NASDAQ:FITB), 6:30 a.m.; Johnson & Johnson (NYSE:JNJ), 6:45 a.m.; Travelers, 6:57 a.m.; Procter & Gamble, 7 a.m.; Verizon Communications (NYSE:VZ), 7am; State Street, 7am; Waters, 7am; Allegheny Technologies (NYSE:ATI), 7:30 a.m. Kimberly Clark, 7:30 a.m.(approx); Huntington Bancshares (NASDAQ:HBAN), 7:30 a.m. (approx); Prologis, 8 a.m.; Texas Instruments (NASDAQ:TXN), 4:01 p.m.; Canadian National Railway, 4:01 p.m.; Capital One Financial (NYSE:COF), 4:05 p.m.; Total System Services (NYSE:TSS), 4:15 p.m.; United Continental Holdings, 4:15 p.m.
S&P 500 Futures: These Are Not Our Fathers Markets, And Don’t Forget It! #ES Up 6.3% In 14 Sessions
There is no such thing as the ‘old days’ anymore. Tools that used to help us make money do not work. Indicators that do work only last as long as the algo programmers can code it into their electronic trading program. We live in a brave new world where the computers run the ‘flow’, and if you get on the wrong side of it, you better get out fast.
While the S&P 500 futures (ESH18:CME) did gap lower Sunday night, down to 2802.00, they didn’t stay down long. By early Monday morning, the ES had up to 2812.00, a 20 handle bounce. The reaction to the three day government shutdown was muted both in the U.S and around the world.
Before the S&P’s opened, the Stoxx 600 was up 0.10%, and the ES was down 0.10%. On the 8:30 bell, the ES opened at 2809.50, and by 10:20 was trading 2822.75, up 11.50 handle on the day. From there, the futures pulled back down to 2816.75 before rocketing up to the 2828.00 level, up 16.75 handles. The next pullback was down to 2822.50 at 1:25 CT.
Just before 2:00, the MiM started to show over $400 million to sell, and then $600 million to sell. The MiM ‘flipped’ to sell $187 million, and then popped up to $790 million to buy on the 2:45 cash close. During that time, the ES traded all the way up to 2838.50, up 27.5 handles, or +0.80%.
Like the title of today’s Opening Print reads, these are not our fathers markets, and if you were not around in 1987, there has never been a run up like this since. Yes, the S&P exploded to new all-time highs Monday after Senate leaders said they reached a deal to end the federal government shutdown. Yes, the yield on the benchmark 10-year U.S. Treasury note rose for a fourth consecutive day to 2.663%, its highest closing level since April 2014. And yes, all three indexes notched record closes, but like we always say, the S&P tends to take bad news and makes good of it. Period. The End.
You know how we have been talking about the guys with the better seats, and how it’s the ETF’s, not the mutual funds, running the show now? Well, here is a great article by the Wall Street Journal.
Yesterday there was less than 500 million shares traded on the NYSE going into the close, and 250 million traded in the last 2 minutes of the day. If you want to know what you are up against you better read this story. When the markets do ‘crash’, who will the buyers be in the ETF’s?
‘As First ETF Turns 25, Exchange-Traded Funds Dominate Investing World’
Originally conceived as a trading tool for institutional investors, ETFs have evolved into a democratizing force.
Keystone Charts – Bitcoin
The U.S. Securities and Exchange Commission (SEC) is scrutinizing public companies that change their name or business model in a bid to capitalize upon the hype surrounding blockchain technology, SEC Chairman Jay Clayton said. Clayton warned that it was not acceptable for companies without a meaningful track record in the sector to dabble in blockchain technology, change their name and immediately offer investors securities without providing adequate disclosures around the risks involved.
South Korea will ban the use of anonymous bank accounts in cryptocurrency trading from Jan. 30, regulators said on Tuesday in a widely telegraphed move designed to stop virtual coins from being used for money laundering and other crimes. Local cryptocurrency traders will not be allowed to make deposits into their virtual currency exchange wallets unless the names on their bank accounts matches the account name in cryptocurrency exchanges. European Union will follow South Korea and China on cryptocurrency regulation.
Bitcoin Real Time Index is -3.5% today, nearing short term key support of 9950 area.
If this breaks we look for the 100dma again and the top of the gap to be pivotal.
Jan CME Bitcoin future is also holding its short term .786 retrace (potential reversal).
XBT Feb future has 9868 area as its s/t pivotal pt support and 11035 area as initial key resistance.
While You Were Sleeping
Overnight, equity markets in Asia went roaring higher, with the 3 major indexes all up over 1%. Leading the way was Hang Seng Index, which closed up a whopping +1.66%. Meanwhile, in Europe, stocks are trading mixed this morning, with the French DAX trying to hold things up at +0.59%.
In the U.S., the E-Mini S&P 500 futures opened last nights Globex session at 2835.25, and initially started trading higher. By 2:00 AM CT, the ES had printed a high a 2842.00, before starting to level off. At that point, the early strength had run its course, and just after 4:30 AM, sellers came in, knocking the ES back down to 2828.75.
Things have calmed down a little, and stocks have started to recover, recently printing 2835.00, a six handle bounce off the low. As of 7:00 AM CT, the last print in the ES is 2833.50, down -1.50 handles, with 184k contracts traded.
The S&P Is On Autopilot
Our View: There have been 14 trading sessions this year, and only two down days. When you take the 169 handle gain so far this year, it comes out to an average gain of 14 handles a day for the 12 winning sessions. Yesterday, energy companies in the S&P 500 rose 2.1%. Despite the U.S. producing more crude oil than Russia and Saudi Arabia, oil continues to rise.
As of Mondays close, the market cap for Google (NASDAQ:GOOGL) reached $800 billion, closing in on Apple (NASDAQ:AAPL). While there are two sides to the trading card, the buy side of the card is the only side that is working right now. Will the rally last forever? No, it won’t, but selling the S&P because you are not long has been a fatal mistake.
Yesterday a fellow trader said my call to buy weakness and look for 2820.00 was spot on. It was, but I had no idea the ES was going to 2838.50, and I don’t think anyone else that thought it would either, but that’s how this has gone so far in 2018. The length of the rally and the size of the ranges have over exceeded expectations. UBS projected the ES would trade as high as 2900.00 in 2018, and its only 62 handles away. Do we think the S&P has gone too far too fast? Hell yes we do, but it doesn’t matter what we think, the S&P is on autopilot.
Up to this point, no sale is a good sale. Our view is that we lean to selling the early rallies and buying weakness. 2843-2845 is a resistance level we are looking at, and 2818-2820 should be support. You can take it from there.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Any decision to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.