There is a lot of anxiety hanging over the stock market right now. With the S&P 500 futures down 5 days in a row, most people thought the futures could rally, but like always there has to be a ‘dipsey doodle’ first. The ES sold off down to 2351.00 and could not have looked worse, then the MiM started showing $50 mil to buy, then $170 mil to buy, then $600 million to buy, and then all the way up to $1.164 bil to buy before tapering off to an actual $680 mil to buy MOC. Traders can say what they like, but when the MiM started moving up, the guys with the better seats rushed in and pushed the future’s all the way back to the 2363.00 area going into the close.
While many are convinced that the S&P 500 futures are going down, I am not so sure about that. Ultra low rates, continued economic improvements, Trumps initiatives, and a no place to go stock environment has not changed. The total move off the high was exactly 50 points (handles) 2401.00 down to 2351.00. My gut tells me that the short sellers are stuck again, and if indeed the jobs number does come in high and the futures pop again, we could see some selling and some type of MrTopStep ‘Counter Trend Friday’ trade. I do not think the futures are going to get crushed, but I do think there could be a pull back and another romp higher.
Yesterday, as the S&P’s were looking their weakest, I came out in the forum and said:
Dboy:(1:59:19 PM):lot of selling into NFP, going to be too short into this number
And then:
Dboy:(2:17:39 PM):paid 52.50 small
I got out of my long position a little too soon, but with the S&P’s down 6 days in a row, and nearing 50 handles and over 2% off the highs, a couple things occurred. First, the macro dip buyers would start scaling in at these levels, and second, this market was way too short going into NFP. If it didn’t pop before NFP, then it would almost certainly pop after the report.
While You Were Sleeping
Overnight Asian stocks markets closed mostly higher, and was followed by solid buying out of Europe, which is all green at the moment. The S&P 500 futures opened the globex session at 2364.50 (ESM) and traded down to 2361.75 on the open. From there the ES went on a bid higher, pushing up to the session high at 2373.00, up 9.75 handles, with a total volume of 139k ESM and 141k ESH traded as of 6:10am CST.
In Asia, 8 out of 11 markets closed higher (Nikkei +1.48%), and in Europe 11 out of 11 markets are trading higher this morning (DAX +0.69%). Today’s economic calendar includes the Employment Situation, Baker-Hughes Rig Count, and Treasury Budget.
Bring On The Jobs Number
Our View: There is a wide range of ‘guesstimates’ for this morning’s non-farm payroll number which ranges from 162,000 to 240,000. Personally, I think the number will come in on the high end. That said, the S&P futures that closed at 2363.20 traded all the way up to 2373.00, taking back nearly 50% of the S&Ps losses over the last several days. The bottom line is that we think price moves higher, but we also understand how much the futures have rallied over the last 24 hours. Our view; you can sell the early rallies and buy weakness or just buy the ES when it pulls back.
PITBULL: clj osc -35/-4 turns up on a close above 5301, esh osc -9/20 turns up on a close above 237034, vix osc 0/2 turns down on a close below 1117.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 11 markets closed higher: Shanghai Comp -0.12%, Hang Seng +0.29%, Nikkei +1.48%
- In Europe 11 out of 11 markets are trading higher: CAC +0.71% DAX +0.69%, FTSE +0.43% at 6:00am ET
- Fair Value (Jun): S&P -2.95 , NASDAQ +5.56 , Dow -42.54
- Total Volume: 82k SPH, 1.78 mil ESH, 13 k SPM, 800k SPM traded