Foreign Markets, Fair Value and Volume:
- In Asia 8 out of 11 markets closed higher: Shanghai Comp +0.79%, Hang Seng +1.81%, Nikkei +1.00%
- In Europe 8 out of 12 markets are trading higher: CAC +0.26%, DAX +1.01%, FTSE -0.10%
- Fair Value: S&P +0.58, NASDAQ +10.13, Dow -24.66
- Total Volume: 1.3mil ESH & 985 SPH traded in the pit
Friday’s Trade: S&P Up 8 Of The Last 9 Sessions, Or Up + 3.5%
In Asia, Hong Kong’s Hang Seng closed up 0.9%, extending its weekly gain to nearly 2%. In Europe, the Stoxx Europe 600 rose 0.3% to finish its second consecutive weekly gain. In the U.S., on Globex, the S&P 500 futures traded up to 2776.75, but had a 10 handle drop down to 2766.75 at 7:40 AM when Facebooks Chief Executive Mark Zuckerberg announced changes that he said would hit user engagement in the near term.
Once the news was out, the ES traded back up to 2774.00 at 8:20 AM, and opened at the 2771.00 area, down ticked to 2770.00, and by 10:00 CT traded all the way up to 2785.75, up +16.25 handles on the day.
After a pullback down to 2779.00, the ES ‘back and filled’ from 2781.00 to the 2785.00 area, and then retested the high of the day at 2785.76. From there it Made a new high and ‘double top’ at 2786.75, pulled back down to 2781.50, and then traded back up to 2786.00 as the MiM went from $315 million to buy to $785 million to buy. At 2:45 the CME cash imbalance came out buy $1.2 billion, and the ES shot up to 2788.75, up 19.5 handles or + 0.70%. On the 3:00 cash close the ES traded 2786.50, and settled on a new daily high at 2789.00 on the 3:15 futures close.
Keystone Charts – Bitcoin
Bitcoin tumbled 18 percent on Tuesday to a four-week trough close to $11,000, after reports that a ban on trading of cryptocurrencies in South Korea was still an option drove fears grew of a wider regulatory crackdown. South Korean news website Yonhap reported that Finance Minister Kim Dong-yeon had told a local radio station that the government would be coming up with a set of measures to clamp down on the “irrational” cryptocurrency investment craze.
Bitcoin attempting a bounce after hitting CME’s 20% hard limit at 11,160. Additional weakness would leave longs stranded and unable to sell. Crypto currency sell offs across the board.
Bitcoin Real Time Index broke its 50dma overnight, but holding above the lower cloud support of 10697.
CME Bitcoin future is down over -33% from its 2018 high. Short term resistance levels at 12352, 13088, 13335*.
Jan XBT expires tomorrow and has 12291 as initial resistance today. Holding below the vwap of 2018 the last few days keeps a negative tone.
While You Were Sleeping
Overnight, equity markets in Asia and Europe traded mostly higher across the board, with the Hang Seng Index leading the way at +1.81%, followed by the DAX, which is currently up +1.01%.
During Sunday nights Globex session, the ES traded up to 2797.50 at 6:20 PM, and made an overnight low at 2790.75 before double topping at the 2796.00 level at 4:50 am and 10:30 am. Total volume was 153,000, and it settled at 2794.40 on Mondays abbreviated holiday close, that’s up 130 handles from the December 29 2667.50 low over the last 8 1/2 sessions.
In the U.S., the E-Mini S&P 500 futures opened last nights Globex session at 2789.75, and has traded higher all night. As of 7:45 AM CT, the last print in the ES is 2801.25, up +12.50 handles, with 320k contracts traded.
S&P Up 9 Out Of The First 10 Session Of 2018
Our View: With so many decisions to make, it’s not hard to make a wrong one. After telling readers to take the word ‘sell’ out of their trading dictionary, I decided last Friday that, based on the S&P being up so much in the first two weeks of 2018 and looking at the S&P cash study for the January expiration, Friday would be a down day. While it did rally and drop on Globex before the 8:30 open, the S&P again ‘exploded higher’. I overlooked the cardinal rule of trading; the trend is your friend. Futures traders have three choices, they can buy, sell or stay out, and the worst thing you can do is is sell because you didn’t buy. In this case it’s best to sit on your hands.
So far this year, the Dow Jones Industrial Average has added more than 500 points for a second consecutive week, the first time it has done so in 18 years. The S&P 500 logged its second straight week of more than 1% gains, and is now up 3.4% (3.7% including Mondays Globex session) in 2018. The dollar has been getting pummeled and the Euro traded above 122.60, while the U.S. bond market has been getting crushed. Clearly, people are selling the dollar and bonds, and buying U.S. stocks.
We think the question is, why even look for a high? Who is to say the S&P can’t go to 2850 or 2900? We are not saying the S&P will continue going straight up without some drops, but the current pattern is very bullish, so why sit around trying to fight it?
Our view is that we lean to selling the early rallies and buying weakness. With the S&P up 9 out of the first 10 sessions in 2018, and the one down day down only -0.1%, the ES has gone up an average of 14.4 handles a day over the last 9 sessions. Can there be a down day this week? Sure, but the dip buyers will come charging back in.
Market Vitals for Tuesday 01-16-2018
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.