After selling off on Wednesdays close and settling at 2440.00, the S&P 500 futures (ESU17:CME) sold off down to 2435.25 on Globex, and then rallied 13.25 handles up to 2448.50 at 9:16 am CT yesterday morning. Many traders believe that trading the night session is better than trading the day session, and I have to agree. With the Asian and European markets in full swing, it seems like there is less algorithmic trading, and the futures seems to have better movement.
The problem for traders in the U.S. is how to keep an eye on the U.S. day session, and stay awake for so many hours without rest. Some traders go to bed after the 3:15 CT ES close and get up when the Asian markets open, but even then it’s a very long haul for most people. Others just skip the U.S. day session all together, and only trade at night, but for your average U.S. futures trader, they just trade from the 8:30 am futures open to the 3:15pm bell.
Big Back And Fill Patterns
Yesterday, on the 8:30 CT open, the ES (ESU17:CME) traded 2447.50, upticked to 2449.00, and then the NQ got slammed, taking the ES back down under the vwap to 2443.00. After that, the ES rallied up to 2446.00, pulled back a few handles, made a new high at 2446.50 and then in came the sell programs that took the ES down to 2438.50, and then down to 2436.25, before bottoming at 2434.50. After a few higher lows, the ES rallied back up to 2440.75 and then back and filled in a two handle range for the next 45 minutes before popping up to 2437.50.
In the last few days, the overall trading ranges and volumes have been good. If you are just trading, and aren’t over opinionated, the trade has been pretty decent.
Total volume at 2:15 was just over 1.1 million. At 2:40 CT the MiM was showing $208 million to buy, and like many days recently, it ‘flipped’ to MOC sell $ 300 million. The ES sold off down to 2436.50 at 2:56, and then bounced back up to 2440.75 on the 3:00 cash close.
In the end the S&P 500 futures (ESU17:CME) settled at 2440.75, down -0.75 handles, or -0.03%, the Dow Jones futures (YMU17:CBT) settled at 21786, down -9 points, or -0.04%, and the Nasdaq 100 futures (NQU17:CME) settled at 5840.50, down -7.50 points, or -0.13%.
While You Were Sleeping
Overnight, equity markets in Asia traded mixed, with slight bias to the upside, and was led by the Shanghai index, which closed higher by a whopping +1.84%. In Europe, most majors are trading higher this morning, as traders wait for news out of Jackson Hole.
In the U.S., the S&P 500 futures opened last night’s globex session at 2442.50, and traded sideways in a 6 handle range for most of the night. At 4:15am CT, the ES caught a bid, and has been steadily grinding higher ever since. As of 6:50am CT, the last print in the ES is 24478.50, up +7.75 handles, with 142k contracts traded, and it feels like a new high will be made before this report gets to you.
In Asia, 6 out of 11 markets closed higher (Shanghai +1.84%), and in Europe 11 out of 12 markets are trading higher this morning (FTSE +0.37%).
Today’s economic calendar includes Durable Goods Orders (8:30 AM ET), Baker-Hughes Rig Count (1:00 PM ET). Fedspeak: Jackson Hole Economic Policy Symposium, Fed Chairwoman Janet Yellen Speaks (10:00 AM ET).
Our View
Unless the Janet Yellen says something big that would make the markets sell off, or North Korea shoots off some ballistic missiles, I think the ES is going up. The overall pattern of the S&P is that it has been back and filling, and every time it drops, more buy stops build up above. Our view is that there will be drops, but we lean to buying them when they come.
