Yesterday, the S&P 500 futures (ESZ17:CME) traded all the way up to 2584.00 on Globex, and printed 2581.75 on the 8:30 CT futures open. After that, the ES pulled back to the vwap at 2580.00, and then shot up to another new all-time high at 2585.50, a level I talked about in yesterday’s view.
Once the high was in, the ES got hit by a few small sell programs. This type of price action is not out of the ordinary. After initially selling off down to 2578.75, the ES rallied back above the vwap at 2582.75, sold off, and made a higher low at 2579.50. The futures made one last stab at the vwap at 2581.50, and then in came a few more sell programs, which pulled the futures down to 2576.25. From there, the ES bounced a few handles before selling off down to the low of the day at 2571.50 at 1:20 CT. After the low was made, the ES did some sideways to higher back and fill action, and made 4 separate highs just below the vwap at 2578.50. When the NYSE MOC came out showing $423 million to sell, the ES sold off back down to 2574.00. Total volume was not bad, 1.26 million ES contracts had traded.
Historical stats are great, but when the S&P’s are up so much and they gap higher on the open, a lot of buying power gets used up. After the ES sold off it just could not gain enough momentum to recapture the vwap, and the late MiM ‘flip’ to over $400 million for sale did not help the late day price action. The day was a case of failed rallies.
In the end the S&P 500 futures (ESZ17:CME) settled at 2574.75, up +2.00 handles, or +0.07%; the Dow Jones futures (YMZ17:CBT) settled at 23372, up +47 points, or +0.20%; the Nasdaq 100 futures (NQZ17:CME) settled at 6240.75, down -9.00 points, or -0.14%; and the Russell 2000 (RTYZ17:CME) settled at 1491.90, down -10.80 points or -0.72% on the day.
While You Were Sleeping
Overnight, equity markets in Asia crept low, as overseas investors await U.S. jobs data, and an imminent decision on the new fed chairman. Meanwhile, in Europe, stocks are trading mixed this morning, with a slight bias to the downside, and being held up by the FTSE, which is up +0.28%.
In the U.S., the S&P 500 futures opened last night’s globex session at 2571.50, and had a pretty wild ride for the rest of the night. Just after 7:00pm CT, the ES was pummeled more than 10 handles, down to 2563.50. Once the low was made, the recovery started. The rally that ensued was a slow grind that would last the next 12 hours, and resulted in a new high pring at 2574.50, just a tick under yesterday’s settlement. As of 7:15am CT, the last print in the ES is 2573.50, down -1.50 handles, with 148k contracts traded.
In Asia, 9 out of 11 markets closed lower (Shanghai -0.38%), and in Europe 7 out of 12 markets are trading lower this morning (FTSE +0.28%).
Today’s economic and earnings calendar includes Chain Store Sales, Challenger Job-Cut Report (7:30 a.m. ET), Jobless Claims (8:30 a.m. ET), Productivity and Costs (8:30 a.m. ET), Bloomberg Consumer Comfort Index (9:45 a.m. ET), EIA Natural Gas Report (10:30 a.m. ET).
Earnings: DuPont (NYSE:DWDP) (6:00 a.m. ET), CIGNA (6:00 a.m. ET), Alibaba (NYSE:BABA) (6:30 a.m. ET), Avon Products (NYSE:AVP) (6:45 a.m. ET), Delphi Automotive (6:45 a.m. ET), Insys Therapeutics (6:50 a.m. ET), Gannett (6:55 a.m. ET), Automatic Data Processing (7:00 a.m. ET), Yum! Brands (NYSE:YUM) (7:10 a.m. ET), Ralph Lauren (NYSE:RL) (8:00 a.m. ET), Exelon (NYSE:EXC) (8:00 a.m. ET), Vulcan Materials (8:00 a.m. ET), PG&E (8:30 a.m. ET), Pandora Media (4:02 a.m. ET), Starbucks (NASDAQ:SBUX) (4:03 p.m. ET), American International Group (NYSE:AIG) (4:15-4:20 p.m. ET), Apple (NASDAQ:AAPL) (4:15-4:20 p.m. ET).
Fed Keeps Rates Unchanged, Expects Rate Hike IN December
Our View: According to FactSet, nearly 70% of the companies in the S&P 500 have reported earnings as of the market close on Wednesday. Roughly three-quarters of those firms have exceeded earnings expectations, compared with the five-year average of 69%. What it feels like is the institutional / ETF / mutual funds are selling into the better earnings, and the question is… why not? With the markets up so much, I think its right to take some profits off the table. Today we have another big round of economic and earnings reports with Apple reporting after the close.
Our view; don’t be surprised to see some further weakness. That said, if the ES gaps lower, we would look to be an early buyer, and look to sell the rally above the vwap. After that we want to get a look at the price action, but I think the ES could bounce back to the 2574-2576 area.
PitBull: CLZ OSC 32/15 turns up on a close above 55.46; ESZ OSC 7/15 turns up on a close above 2573.93; VIX OSC -6/6 turns down on a close below 10.51.
