S&P 500 Futures: Ain’t No Cure For The Summertime Blues
Danny Riley | Jul 26, 2017 12:31AM ET
It’s hard to fight the S&P 500 futures when the volume is so low. Yes, it is that time of year when there is ‘downside potential’, but at the end of the day, I think it all comes down to one thing; ultra low interest rates.
Yesterday’s overnight Globex range was 2463.50 – 2470.50, with just over 166k contracts traded. On the the 8:30 CT pit open, the big S&P’s (SPU17:CME) first print was 2468.50. The ES ‘gradually’ traded back up, and bounced off the vwap at 2466.25, and then, at around 12:45 CT, had traded up to the 2468.00 area, before selling back off under 2467.00, where it hung out for over an hour.
Yesterday’s total volume was only 570,000 contacts, including the 166,000 from Globex. The total trading range was just 4.5 handles in a brutally slow trading session.
At around 2:40 CT, the ES traded up to 2470.50, and then pulled back under 2468.00, but the big show was not in the ES, everything was being driven by the Nasdaq 100 futures (NQU17:CME), which traded all the way up to 5950.50. All day long the NQ was ‘bid’, and was clearly the catalyst for the move up. The MiM started out showing over $160 million to sell, and then ‘flipped’ to $631 million to buy. The actual NYSE imbalance came out buy $650 million.
h2 While You Were Sleeping/h2Overnight, equity markets in Asia traded mixed, with a slight bias to the upside, and were led by the ASX 200, which closed up +0.68%. Meanwhile, in Europe, all markets are currently trading higher, with the exception of the Helsinki All Share Index, which is down -1.36%.
In the U.S., the S&P 500 futures opened last nights globex session at 2467.00, and traded in a 2.5 handle range from 2466.25 to 2468.75 for most of the night. As European markets opened, the ESU caught a bid and started making new highs; first at 2470.00, then 2471.50, and lastly 2473.50. As of 6:30am CT, the ES is trading on its highs at 2473.50, up 4.75 handles, with 91k contracts traded.
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In Asia, 7 out of 11 markets closed higher (Shanghai -0.21%), and in Europe 11 out of 12 markets are trading higher this morning (FTSE +0.80%). Today’s economic calendar includes the beginning of the FOMC Meeting, Redbook, FHFA House Price Index, S&P Corelogic Case-Shiller HPI, Consumer Confidence, Richmond Fed Manufacturing Index, State Street Investor Confidence Index, a 4-Week Bill Auction, and a 2-Yr Note Auction.
h2 Our View/h2It’s hard calling market tops, especially when the summer trade is in full gear, and volumes are so low. What also makes it hard is the constant rotation between the DOW, S&P and Nasdaq. Yesterday the Dow fell 67 points, or 0.3%, the S&P 500 lost 0.1%, and the Nasdaq Composite gained 0.4%. In addition to 160 companies in the S&P reporting earnings this week, the 2 day FOMC meeting starts today.
According to the CBOT fed funds contract, there is a 96% probablility that the federal reserve will raise interest rates (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ).
Our view; we continue to think the S&P futures goes higher. You can sell the early rally and buy weakness, or just wait for a pullback and buy it.
PitBull: CLU osc 1/12 turns up on a close above 47.86; ESU osc 25/12 turns up on a close above 2493.45; VIX osc -11/-5 turns down on a close below 8.87.
Market Vitals for Tuesday 07-25-2017
- In Asia 7 out of 11 markets closed higher: Shanghai Comp -0.21%, Hang Seng +0.02%, Nikkei -0.10%
- In Europe 11 out of 12 markets are trading higher: CAC +1.07%, DAX +0.52%, FTSE +0.80%
- Fair Value: S&P -2.63, NASDAQ +0.16, Dow -52.72
- Total Volume: 850k ESU, and 350 SPU traded in the pit
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