Is it the quiet before the storm? How long can the markets remain so tranquil? On Wednesday the VIX dipped as low as 8.9, below its all-time closing record of 9.1. While its not on traders radars right now the South Korean 2018 Winter Olympics in Pyeongchang could be a trouble spot. The upcoming Olympic events, which are set to take place just 50 miles away from the fortified border with North Korea.
There seems to be a pattern that sticks out. How long it will last is anyone’s guess, but it seems like buying the S&P 500 futures on pullbacks at night, then going to bed and selling them in the morning is a viable way to trade. Maybe it has something to do with Europe, or maybe it’s because there are no cash markets at night, either way, it seems to work. Additionally, by putting in a stop and not looking at the futures all night, there is less risk of getting shaken out.
Thursday’s trade started with low Globex volume, only 116,000 ESH traded, and an overnight trading range of 2680.75 to 2689.50. The ES traded 2689.00 on the 8:30 CT open, rallied up to 2690.50, and then sold off down to 2584.75. The next move was a pop up to 2692.75, and then back down to 2689.75. Volume was extremely low. At 10:20 CT total volume was only 370,000, with 106,000 of that coming from the Globex pre-8:30 open. Clearly this is creating a thin to win trading environment.
After the dip, the ES traded all the way up to 2696.00, and then pulled back down to 2691.50 as the MiM started to show $400 million to sell. Total volume at 2:10 CT was only 600,000 contracts. After a small uptick the ES sold off down to 2686.75 on the 3:00 cash close after the final MOC came out $1.1 billion to sell. On the 3:15 futures close the ES traded back up to the vwap 2689.75.
In terms of the days overall trade and volume, it was a slow day. In terms of the overall tone, the ES fell 2 handles short of the all time high at 2698.00. In the end the S&P 500 futures (ESH18:CME) settled at 2689.50, up +6.00 handles, or +0.22%; the Dow Jones futures (YMH18:CBT) settled at 24,795, up +39 points, or +0.15%; the Nasdaq 100 futures (NQH18:CME) settled at 6510.50, up +2.25 points, or +0.34%; and the Russell 2000 (RTYH18:CME) settled at 1553.40, up +10.80 points or +0.69% on the day.
As always, please use protective buy and sell stops when trading futures and options.