The S&P 500 futures started out the day making back the loss from the Friday late day sell off, and more… After a flat to modestly higher 8:30 CT futures open, the ES initially rallied up to 2390.75 (double top), and then sold off under the VWAP. Below are a few of the comments I made to the MrTopStep forum. The messages I sent out are what I call ‘trading flow’.
As you can see the early messages I sent out are EST:
- 09:08:06 TRADINGDATA2: (driley) we did not make it up to my 2410-2412 level last week but I think there is a good possibility of it this week
- 09:08:28 TRADINGDATA2: (driley) I also do not think all the shorts have covered
- 09:09:13 TRADINGDATA2: (driley) ES has to rally above 2396 and hold on a closing basis and then I think we will see a retest of the new contracts highs
- 09:28:23 TRADINGDATA2: (driley) PitBull: cln osc 25/-5 turns down on a close below 5027 esm osc -25/5 turns up on a close above 234456 vix osc na
After the open the (ESM17:CME) immediately started moving higher.
- 09:32:22 TRADINGDATA2: (driley) Can you say Mutual Fund Monday ‘short squeeze? ‘
- 09:34:34 TRADINGDATA2: (driley) The Running of the Bulls
- 09:36:48 TRADINGDATA2: (driley) Our View: All the increased volume / selling on Wednesday only added more buy stops above the market. One of the things I continue to push is what happens after the sellers get off base. It’s all about following the overall price action of the S&P, which has not changed at all. The trend is your friend traders, and as long as interest rates are historically low, you should never forget it. If you are afraid to buy the futures after a big dip, don’t be afraid to buy some cheap calls, or sell some puts.
- Our view; the ES is going back up, but after the drop and rally, there needs to be some mending. This means that the ES needs to pull back a little before going back up. I think you can take it from there.
- 10:10:10 TRADINGDATA2: (driley) first sell area
- 10:10:32 TRADINGDATA2: (driley) double top off the 2390.75s
- 10:22:27 TRADINGDATA2: (driley) Here is the quagmire for the short sellers today 1) it’s too early and 2) the shorts from lower are stuck and there are more stops to run / keep an eye on or below the vwap, initially at 2386 but 2382.25 and a few ticks below is big
And that’s exactly what the ES did, it sold off under the VWAP, held the 2385.00 area, and then blasted up to a new high at 2393.25. This is what I used to do from our S&P 500 desk on the CME floor. At one point we had over 600 hedge funds, banks, prop trading firms and professional traders. I know this will sound crazy, but when I would do ‘blasts’ to those 600, the ES would move right away. It’s a different story today. Back then there were more humans trading and less Algorithmic and HFT’s, but today it’s the exact opposite.
By the end of the day, the futures made an afternoon low of 2389.75, before rallying in the close up to a new high at 2394.25, and settling the session at 2392.50, which was last week’s RTH open. The MOC was 100 million to buy, and total volume was 1.1 million mini’s traded.
While You Were Sleeping
Overnight, stock markets in Asia had an overall modestly lower tone, followed by Europe which also has an overall modestly higher tone this morning in what has been a fairly quiet and recently typical overnight trade. In the U.S. the S&P 500 futures opened globex at 2393.50 and traveled down to 2386.75 low just before the Tokyo open. From there the futures rallied into the Euro open, pushing up to 2387.75, two hours into the Euro session, completing an eleven handle range. As of 5:35 am cst the most recent print is 2395.50 up 2.75 handles on volume of 155k.
In Asia, 7 out of 11 markets closed lower (Shanghai -0.45%), and in Europe 10 out of 12 markets are trading higher this morning (DAX +0.34%). Today’s economic calendar includes Redbook, PMI Composite Flash, New Home Sales, Richmond Fed Manufacturing Index, a 4-Week Bill Auction, a 52-Week Bill Auction, a 2-Yr Note Auction, a Neel Kashkari Speaks, and Patrick Harker Speaks.
Our View
In tomorrow’s Opening Print, we are going to take time and dedicate the edition to memorializing WB as friends and traders. As for our view on the markets we think the ES goes higher.
PitBull: CLN osc 28/-2 turns down on a close below 5088, ESM osc -9/3 turns down on a close below 234761, VIX osc na.
As always, please use protective buy and sell stops when trading futures and options.