S&P 500 Futures: Markets Flat On Columbus Day
The S&P futures (ESZ19:CME) closed Monday’s Columbus Day holiday session at 2966.15 after opening at 2965.81. Savvy traders had the opportunity overnight to initiate a position as low as 2953.75, but that was short lived.
As noted on the attached MarketProfile screenshot, the 2953.00 level was not only a prior level of resistance (see 20 day moving average), it showed a normal retracement to a low volume node (LVN), something we rely upon when employing these histograms. Remember, water flows from a high point to a low point, something very common and often exhibited in trading as well.
DeltaPrint charts courtesy of AMS Trading Group
The overnight low was never really tested during regular trading hours, neither were the highs. Despite rallying from the overnight low, the highest the S&P traded was 2972.50, a little more than a twenty-point trading range, indicative of the effect a closed bond market brings to the trading world.
Markets traded slightly north of the VWAP most of the day, which wasn’t tested until after hours kicked in, hitting a low of 2963.50 before heading higher. All in all, it was a good day to sleep in late or go home early.
With earnings starting to hit the street, the end of the overnight session heading into regular trading hours could prove to be interesting. JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS), UnitedHealth (NYSE:UNH), Wells Fargo (NYSE:WFC) and Johnson & Johnson (NYSE:JNJ) report in the early morning hours.
As these bell weather stocks report, the expectations of their “sister” stocks, CitiGroup, MorganStanley and Bank of America (NYSE:BAC) add strength to their initial direction, with Goldman really being the only one of the four with the potential to disappoint (street estimates look for a decline of 20% in their earning… how many times how many times have we seen that then the report just blows away the estimates).
The Empire State Manufacturing Survey, which was released a day early, surprisingly beat estimates, rising to 4.0 versus an expectation of 2.0. That may put some pressure on the 10-year note and other debt instruments, but questions regarding the U.S. / China trade deal should offset declines.
DeltaPrint charts courtesy of AMS Trading Group
Brexit remains the wild card this week, with questions remaining related to what the consequences of a “no-deal” Brexit brings to the EU and the rest of the world. The European Council meets later in the week (Thursday / Friday), so if you’re trading these markets, it makes sense to drink lots of coffee because they’re going to be some long days and nights (we went long on KC Coffee today for different reasons, primarily the ratio between the Brazilian Real and the Chinese Yuan (1:1.3), almost as high as the Aussie Dollar, we’re long at 6700).
The macroeconomic world is alive and well. Analysts who rely on IBES data from Refinitiv are forecasting a 3.2% decline in earnings, quarter-over-quarter from a year ago, but we all know how that works. Historically, company earnings exceed estimates, so look for surprises on the upside. Keep in mind, however, that earnings among the S&P 500 look to be the weakest in almost three years with respect to year-over-year quarterly performance.