S&P 500 Futures: MrTopStep 10 Handle Rule
MrTopStep | Aug 23, 2016 09:01AM ET
It was another slow trading day on a list of many. Yes, it was a low volume grinder, and there were few people trading. Yes, the S&P 500 futures closed above 2180.00. And yes, one of our trading rules came into play, the MrTopStep ‘10 handle rule.’ We will not be doing a big drawn out explanation of the day’s trade. Everything I just said should just about cover it. As the dog days of August come into play, there is only one thing we know for sure, the S&P futures are only 20 handles away from the long awaited ES 2200.00.
h2 S&P Grinder/h2The past 30 days have been the least volatile of any 30-day period in more than two decades. Only five days during the most recent stretch saw the S&P 500 move by more than 0.5% in either direction. That’s the lowest volatility since the autumn of 1995.
It really was a long slow day. At one point the Nasdaq futures (NQU16:CME) were down 19.5 points and the S&P futures (ESU16:CM) were down 9.5 handles. Both futures traded lower after the open, both futures made early lows, and eventually both futures went back to unchanged on the day. It really was a low volume grind that basically traded in a range all day.
With a lack of economic and earnings news the index markets swung from highs to lows all day. As far as the tone goes, the markets seem to go out on a firm note. In the end the index markets finished ‘little changed’ with the S&P down a modest -0.06%, the Dow closed down -0.12%, the Nasdaq reversed from lower on the day to close up +0.12%, and oil fell 3%.
h2 Yellen’s Speech and Jackson Hole/h2It’s our guess that the index markets will continue to trade in a narrow range to the upside in front to next week’s ‘fed symposium’ in Jackson Hole. There really has not been any major buying or selling lately, and we don’t think that’s going to change anytime soon. I know Stanley Fischer said in a speech Sunday night that the bank was close to its economic targets. He also said that market participants took that as a green light for a rate hike in September. I am sticking with the idea that the fed won’t hike rates in 2016, but more light will be shed on that during Yellen’s speech.
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Overnight global equity markets have seen a bid return as major players are trading higher this morning. The S&P 500 futures after grinded up to 2188 a couple hours into the European session, up 6.5 handles, and is currently trading two handles off that high. Today’s calendar includes new home sales as the headline event. As the S&P has shrugged off most economic releases this summer, there is nothing in today’s numbers that ought to be market moving.
The 2191.75 high is in target right now followed by the big round level at 2200. Bulls need to hold the 2182-2186 area for support. Best case for bears would be one more failure at 2191.75 early in the session and then some kind of push below yesterday’s close. For now that’s as much momentum as sellers can expect on a good day.
In Asia, 8 out of 11 markets closed higher (Shanghai +0.16%), and in Europe 12 out of 12 markets are trading higher this morning (DAX +0.88%). Today’s economic calendar includes Redbook, New Home Sales, Richmond Fed Manufacturing Index, a 4-Week Bill Auction, and a 2-Yr Note Auction.
h2 Welcome To Turn Around Tuesday/h2Our view: Monday’s have not been so good to the S&P, but Tuesdays have. After we get past the early economic report, it’s our guess the S&P heads higher. Like today’s reports, we are keeping the call light; buy weakness. There is a big line of buy stops that start above 2185.00-2186.00 that go straight to 2194.
- In Asia 8 out of 11 markets closed higher: Shanghai Comp +0.16%, Hang Seng UNCHED, Nikkei -0.61%
- In Europe 12 out of 12 markets are trading higher : CAC +0.76%, DAX +0.88%, FTSE +0.46% at 6:00am ET
- Fair Value: S&P -2.23, NASDAQ -0.78 , Dow -22.49
- Total Volume: 1.54 mil ESU and 1.3 k SPU traded
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