Yesterday was again what we thought it would be. After Tuesday’s light session, Wednesday turned into a real grind as we speculated that traders would begin to leave their desks midweek, and we were right. The total volume dropped to 667k, a staggering low number for a full session that is still a couple days away from holiday.
On the cash open the S&P 500 futures printed 2265.75, down three ticks, and quickly traded to a daily high of 2268.00, before staying in a 2.75 handle range for the next five hours. Going into the end of day the MiM came online showing size to buy, but as these sell orders began to dwindle, the S&P began to trend lower for the first time in the day. The ES traded down to 2259.75, making it just seven ticks shy of a 10 handle range day, and settled the day at 2260.50, down six handles.
Overnight Asian equity markets were mixed, but had some activity, and Europe opened mostly quiet. The S&P’s traded to a 2255.50 low early in the Tokyo session, and since then have bid up to 2260.50, yesterday’s settlement area. The ES found resistance there and pushed back down to 2258.50, down two handles on the day, with a range of five handles, and volume at 58k as of 6:38 am cst.
Asia and Europe
In Asia, 7 out of 11 markets closed lower (Shanghai +0.07%), and in Europe 10 out of 11 markets are trading lower this morning (FTSE -0.09%). Today’s economic calendar includes the Weekly Bill Settlement, Durable Goods Orders, GDP, Jobless Claims, Chicago Fed National Activity Index, Corporate Profits, FHFA House Price Index, Bloomberg Consumer Comfort Index, Personal Income and Outlays, Leading Indicators, EIA Natural Gas Report, Kansas City Fed Manufacturing Index, a 4-Week Bill Announcement, a 3-Month Bill Announcement, a 6-Month Bill Announcement, a 2-Yr FRN Note Announcement, a 2-Yr Note Announcement, a 5-Yr Note Announcement, a 7-Yr Note Announcement, a 5-Yr TIPS Auction, Fed Balance Sheet, and Money Supply.
Our View
Today’s calendar picks up here in the U.S. with the S&P 500 futures looking weak. Yesterday in the room, WB said that today likely offered the most opportunity, and we agree. Sellers have an opportunity to push this market into further weakness, as it appears to be rolling over in a very modest sense. Meanwhile, buyers have to defend here.
Our view is to sell the early rallies and buy late day weakness, but we want to buy small and sell with more size. We will be able to tell in the first hour, with volume and price, how the day is going to be, and there will be nothing worse than trying to day trade this market on a stubborn slow day.
As always, please use protective buy and sell stops when trading futures and options.