As the new president continues to pounce on his opponents, the status quo, and ‘deliver’ on his promises to make America great again, the US stock markets have reacted in kind. The Dow Jones Industrial Average has surpassed 20,000, and the S&P 500 futures (ESH17:CME) traded all the way up to 2299.50, just two ticks away 2300.00 in the futures.
Since President Trump won the election the US stock market cap has increased by $2 trillion dollars. While I agree it has not been business as usual, I also understand the US has been losing its competitive edge for the last 20 years, and especially over the last 10 years. I understand the protests, I get it. Some people just can’t move on from the idea that Hillary Clinton lost and Donald Trump won. It doesn’t matter how big the protests get… President Trump is delivering on his campaign promises!
Overall, yesterday was a much quieter day. The overnight range in the ESH was 2299.50 – 2291.75, with 160,000 contracts traded on Globex. There was a sell off down to 2293.00 just before the 8:30 CT, down just three ticks, and then a push to an early high of 2296.50, up just 2.75 handles on the day From there the futures maintained a slow and steady grind lower, down to 2289.50, before rallying back up to 2295.00 just after 12:00 pm cst, and finally settling at 2294.00.
The two day rally breaking out of the range seemed to quiet down yesterday on T+3. The markets head into the end of the month, and then begins February next week, which actually has very weak stats for post election years.
According to our friends at Stock Traders Almanac, “big January gains often correct or consolidate during the month of Valentines and Presidents,” adding that when January is up over 2% February tends to be lower about 2/3rds of the time. Adding to this negativity, the post election year performance for February is even worse, ranking as the worst month after election years for all the major indices.
While You Were Sleeping
Overnight, some Asian markets were closed for the lunar new year, and the rest of Asian markets were mixed. Europe opened with a modest, but consistent, offer across the board. The S&P’s made an early Asian session low of 2291.00 and then rallied up to 2296.75 early after the Euro open. The last print in the ESH is at 2293.00, down one handle, on volume of 67k at 6:10 am cst.
In Asia, 5 out of 8 open markets closed higher (Nikkei +0.34%), and in Europe 10 out of 11 markets are trading lower this morning (DAX -0.27%). Today’s economic calendar includes Durable Goods Orders, GDP, Consumer Sentiment, and the Baker-Hughes Rig Count.
Today’s Calendar Preview from BofA/ML
BULL STAMPEDE
Our View: There is a basic pattern in the S&P 500 futures (ESH17:CME). Almost every day for the last few months the futures open, rally initially, and then sell off. Buying the early to midday sell off has been the best trade in the S&P for a long time. The problem, like the PitBull said to me yesterday, is that if traders are not long they are always looking to sell it. That is not where the money trade is. Even after a 264.50 handle rally after Trump won the election, there has not been a single day 1% close lower in the S&P in more than 75 days. It has been ‘impossible’ to fight, no matter how good your trade location is.
