As expected, the markets are slow, and volume has dropped. All the snow and dropping temperatures have caused thousands of flight cancellations. The cost of a Spirit airlines ticket from Chicago to Florida is over $500.00.The airports are jammed and it’s only going to get worse as the weak wears on. There are only 5 days left until Christmas! Can you believe 2016 is coming to an end already!?
Has it been a good year for most traders? I do not think so. Will it be better in 2017? I honestly think it will be, and the main driver is going to be the next president of the United States, Donald Trump. Is he going to shake up the status quo? He’s been doing that since the night he was elected, and we don’t think it’s going to stop. Will a Trump White House make for some great trading? You bet your life Trump is going to make for some great trading, and big moves, but we don’t want things to get out of control either, which we fear is a very a real possibility.
Holiday Markets Have Arrived
As yesterday opened, we knew it was going to be slow, with only 85k contracts traded on globex in a five handle range. The S&P 500 futures opened at 2256.00 on the 8:30am bell and made a 2254.00 low before rallying up to 2263.75 just after 10:00am cst. From there the S&P’s retraced back down to the opening range, and then rallied up to a lower high of 2262.50 going into the afternoon, with the MiM showing over $500 million to buy early on.
Heading into the final hour the ESH17:CME was weaker with the futures trading down to 2254.25, a tick from the morning low, before bouncing up with a moc of $500 million to sell. At the end of the day, the total volume was light, with less than 900k mini’s traded, in a tight range, just a tick shy of 10 handles.
While You Were Sleeping
Overnight global stock markets were quiet but traded mostly higher. The S&P 500 futures once again saw sideways price action. Opening the globex session at 2260.25, the low would be 2260.00, and would print three separate hours during the night. The grind was higher, making a high print of 2264.75 early after the European open, and has last traded 2263.75, up 3.75 handles on the day, with the globex range of 4.75 handles on volume of 48k as of 5:54 am cst.
Following an almost dormant overnight trade will be an almost non existent calendar today, perhaps making Monday’s range more exciting that we initially thought. The dip buyers at this point are still controlling the tape, and with the seasonal grind higher and volume getting lower, thin-to-win could take over and lead the futures to new all time highs. Bears were unable to take out the 2250 floor that the bulls rebuilt, and now the momentum is in the bulls hands, as the S&P’s took out yesterday’s high this morning in globex. Buyers need to continue this push to close near 2270 at least.
Asia and Europe
In Asia, 6 out of 11 markets closed higher (Nikkei +0.53%), and in Europe 7 out of 11 markets are trading higher this morning (FTSE +0.14%). Today’s economic calendar includes Redbook and a 4-Week Bill Auction.
Our View
It’s 7:15 am CT and the ESH17 just traded 2267.00, only 6.0 handles (points) off the S&P futures all time contract high. Today’s economic calendar is the lightest of the week. While I still think the S&P will close down on the week, two things are working against that idea. 1) Is the PitBull’s rule that the S&P tends to rally early in the week and early in the day, and no. 2) Today is Turn Around Tuesday, which has been up the last six occasions.
I do not think many will disagree, it has not been an easy trade this year, especially over the last few months. If you made money in 2016 you are a rare bird, and if you didn’t, it’s all about starting anew in 2017. The last two trading weeks of December are never an easy trade. As more traders push back for the holidays there will be an even larger absence of humans playing. Its also time to start thinking about the Santa Claus rally, T+3, and the 2016 year end rebalance.
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed higher: Shanghai Comp -0.49%, Hang Seng -0.47%, Nikkei +0.53%
- In Europe 7 out of 11 markets are trading higher: CAC +0.28%, DAX +0.01%, FTSE +0.14% at 6:00am ET
- Fair Value: S&P -4.13, NASDAQ +1.97, Dow -56.04
- Total Volume: 928k ESH and 5.3k SPH traded