Rough Start for S&P 500

Published 01/05/2015, 12:15 PM
Updated 05/14/2017, 06:45 AM
ESH25
-
1YMH25
-
US10YT=X
-

S&P 500 Futures

If you read The Wall Street Journal, it will say weakness in Europe pulled the US stock market lower; but we don’t think that was the case. The true tipping point came last Wednesday when the S&P 500 futures (ESH15:CME) sold off then opened higher in Globex climbing 4.5 points in the first few minutes -- on just 3,000 traded contracts. Throughout the night and after the 8:30 open, the S&P futures continued to rally all the way up to 2067.25, up 15 handles from Wednesday’s 2052.40 close. Clearly the S&P used up all its buying power early in the session.

By 8:45 AM CT the S&P started reversing and traded all the way down to 2038.75 around 12:30 CT, a 28-handle selloff. Once the algorithmic trading programs chased the buy stops they started feeling out the downside stops. The Dow Jones futures (YMH15:CBT) closed 29 points lower, down 1.2% on the week. The Nasdaq futures (NQH15:CME) closed down 18.5 points. Despite the late run-up and the $2 billion buy, all the indices fell hard going into the close. The E-mini traded up to 2055.75 but sold off 10 handles down to 2045.25 and settled at 2046.25, down 6.25 handles. The S&P (^GSPC:SNP) closed out the week down 1.5% and the Nasdaq ended down 1.7% for the week.

In Asia 8 of 12 markets closed lower and in Europe 9 of 12 markets are trading lower this morning. This week’s economic calendar includes some key economic reports: the FOMC minutes, the International Trader numbers and Friday’s jobs report. In all there are 18 economic releases and U.S. 10-Year or T-bond auctions or announcements. Today’s economic calendar includes the Motor Vehicle Sales, Gallup US Consumer Spending, San Francisco Fed President John Williams in Boston on a panel discussing housing, unemployment and monetary policy, 4-week, 3- and 6-month T-bill auctions, TD Ameritrade IMX, and earnings from Peak Resorts (NASDAQ: SKIS) and Ennis (NYSE: EBF).

Back to work, everybody

Our view: Did you know the ESH has closed down 3 out of the last 5 sessions? One of the current problems with the stock market right now is a big lack of liquidity. Most traders started cutting back before Christmas and will return this week. Right now the overall price action is one of failed rallies, but I do think that may change this week. Our view is to buy the early weakness. This doesn’t mean the selloff is over, but it’s close.

As always, please use protective buy and sell stops when trading futures and options.

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.