The saber rattling continued between the U.S. and North Korea Thursday night when North Korea’s foreign minister said the country could detonate a hydrogen bomb over the Pacific Ocean in response to President Donald Trump’s speech before the United Nations that warned the U.S. would annihilate North Korea if forced to defend itself or its allies.
After a late day sell off on Thursday, the S&P 500 futures (ESZ17:CME) traded down slightly, but as the news about North Korea detonating a hydrogen bomb over the Pacific Ocean spread out, the ES sold off down to 2492.00. By 6:15 Friday morning, the ES had bounced back up to 2499.00, just one handle lower than Thursday’s close. After the rally back, the ES sold off down to 2494.25, and ended up opening the 8:30am CT futures session at 2494.75. From there, the ES had a few small pops and drops before trading up to 2498.75. The next move was back down to 2495.25.
After the 2495.25 low the ES traded back up to 2498.25. Hellishes trade going on, ES back to a 3 handle trading range. The next move continued to keep the ES in its 3 handle range, the futures printed down to 2496.25. Late in the day the ES started going bid as the MiM went from buy $285 million up to $1.1 billion to buy and the ES traded up to 2501.00 on the 3:00 cash close. I think the guys with the better seats knew they were going to put the money back to work they sold on Thursday, and that’s why the ES never really sold off, it was planned ahead.
There really weren’t any sellers. The VIX was trading 9.91, the QCHA was up +31, and the Russell 2000 was firm all day. It looks like the $1.1 billion sold on Thursday’s close was being put back to work in the small caps.
In the end the S&P 500 futures (ESZ17:CME) settled at 2499.50, down -1.50 handles, or -0.06%, the Dow Jones futures (YMZ17:CBT) settled at 22299, down -34 points, or -0.15%, and the Nasdaq 100 futures (NQZ17:CME) settled at 5937.50, down -9.50 points, or -0.16%.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with a slight bias to the downside, and were led by the Hang Seng, which closed down -1.36%. Meanwhile, in Europe, stocks are gaining strength this morning after a pretty volatile night, and are being led by the DAX, which is up +0.19%.
In the U.S., the S&P 500 futures opened last night’s globex session at 2499.00, and started making some pretty wild moves early on. After spiking up to 2504.50 just after 7:30pm CT, the ES did an about face and started heading lower. By 2:15am CT, the ES had given back all of its early gains, and made a new low at 2495.00, nearly completing a MrTopStep 10 handle rule. As of 7:00am CT, the last print in the ES is 2498.00, down -0.25 handles.
In Asia, 7 out of 11 markets closed lower (Shanghai -0.35%), and in Europe 8 out of 12 markets are trading higher this morning (FTSE -0.12%).
Today’s economic includes Chicago Fed National Activity Index (8:30 a.m. ET), Dallas Fed Manufacturing Survey (10:30 a.m. ET); Fedspeak — William Dudley Speaks (8:30 a.m. ET), Charles Evans Speaks (12:40 p.m. ET), Neel Kashkari Speaks (6:30 p.m. ET); Earnings — Red Hat (4:15 p.m. ET).
Lots of Data, Fed Fed Speak and Earnings This Week
Our View: At 7:30 last night the ES traded up to 2504.50. Despite the ongoing nuclear threat, I think the ES is heading to new all time highs. Does any of this make sense? No, but it’s how this game is played. Our view is for higher prices, buy weakness.
PitBull: CLX OSC turns down on a close below 51.76; ESZ OSC 9/21 turns up on a close above 2515.56; VIX OSC -14/-8 turns down on a close below 9.22.
