Russian troops are massed along the Ukrainian border. With the S&P nearing its all-time high again, the tense political situation between Russia and the Ukraine may overshadow today’s trade.
Stocks ended Thursday up, though off considerably from early highs, led by the Nasdaq Composite. The Nasdaq was buoyed by gains in tech giants Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and most important Apple (NASDAQ:AAPL), which reported higher-than-expected earnings and an upcoming stock split, which will clear legal hurdles to its inclusion in the Dow 30.
The Dow Jones industrial average (^DJI) remained unchanged to close at 16,501.65. The S&P 500 (SNP:^GSPC) gained 3.22 points or 0.17 percent, to 1,878.61. The Nasdaq Composite (^IXIC) added 21.372 points or 0.52 percent, to end at 4,148.338. The S&P IT index was the best-performing sector.
In yesterday’s View we closed by reminding you of the MrTopStep 10-Handle Rule, that the S&P [CME:SPM14] tends to move in 10-point runs. We ended by saying, “Given the ranges we’ve seen the past week, 10-handle moves in either direction (1870 or 1890) are a distinct possibility.” Overnight before Thursday, the S&P had been hovering just under 1880.
Almost on cue, on Thursday’s open, the market dropped over 10 handles in 20 minutes, then retraced 10 handles up, all before noon. 10-handle moves have been a big part of the stairstep rally of the last two weeks. Watch for them, whether the market drops further or runs up to 1900.
The Asian markets closed mostly lower and in Europe 10 of 12 markets are trading lower (DAX-1.00%). Today’s economic and earnings calendar includes PMI Services Flash, Consumer Sentiment and earnings from Ford and Colgate-Palmolive ahead of the bell.
S&P up 7 out of the last 8 sessions
New Russian military drills along the Ukrainian border are creating a very tense situation. Based on the rhetoric and knowing Putin it’s our guess they invade the eastern part of the country in the next few days. I knew when they showed up along the border they were going to annex Crimea and that they were not going back to base. And they were never going to honor the agreement to get the Russian separatists out of the eastern part of the Ukraine. Putin is trying to rewrite history.
Overall I still think the S&P is on track for 1900, but there has been an obvious pickup in headline news related to an invasion.
Our view is to be careful; we lean to selling the early rallies and buying weakness but with tight stops. If the S&P starts going down early and doesn’t bounce, it’s telling you there is too much risk headed into the weekend to be long.
As always, please keep an eye on the 10-handle rule and please use stops when trading futures and options.
- In Asia, 7 of 11 markets closed lower: Shanghai Comp. -1.00%, Hang Seng -1.50%, Nikkei +0.17%.
- In Europe, 10 of 12 markets are trading lower: DAX -1.13%, FTSE -0.27%
- Morning headline: “Russian war games and an S&P downgrade”
- S&P Fair Value: -6.04
- Total volume: 1.57M ESM and 3.8K SPM traded
- Economic calendar: PMI Services Flash, Consumer Sentiment. Earnings from Ford and Colgate-Palmolive ahead of the bell.
- E-mini S&P 5001860.50-12.50 - -0.67%
- Crude102.15+0.02 - +0.02%
- Shanghai Composite0.00N/A - N/A
- Hang Seng22223.529-339.271 - -1.50%
- Nikkei 22514429.26+24.27 - +0.17%
- DAX9401.55-147.13 - -1.54%
- FTSE 1006685.69-17.31 - -0.26%
- Euro1.3834
