S&P 500 Futures: Sell Nasdaq (NQH17:CME) Buy Dow (YMH17:CBT)
MrTopStep | Feb 26, 2017 12:25AM ET
You had to know it was coming. As the stock market continues to rally to new record highs, complacency is reaching an extreme. The S&P 500 futures (ESH17:CME), Nasdaq 100 futures (NQH17:CME), and the Dow Jones futures (YMH17:CBT) have been going up almost everyday. The S&P has now gone 91 days without a -1% down day. Something that drew our attention yesterday was that while the Nasdaq futures fell 51 handles from it’s high, or .95%, the Dow futures only fell 87 points from it’s high or about .40%.
Not only has the S&P failed to close lower by 1%, the 10 handle pullbacks, which account for smaller than a half percent move, have also been rare in the month of February. Before yesterday’s 10 handle retracement, there had only been two pullbacks of ten handles or more in all of February. Meanwhile, 20 handle retracements have been also rare, having occurred only 4 times this year. What used to seem like quiet markets have given way to almost non-existent trading, as waiting for retracements has become too easy to be left behind.
Yesterday, the S&P futures pushed to a new all time high during the latter part of the globex session, printing up to 2367.50 just before the open. The futures failed to reach that high early after the open, and then the bottom seemed to fall out, as the S&P’s pushed from 2366.50 down to 2353.00 just before the Euro close. From there, the ES then bounced back to 2365.00 late in the day, making a lower high, before showing some inability to attack the highs into the close and closing the day at 2363.25, up 2.25 handles, with a flat MOC.
h2 While You Were Sleeping/h2Overnight Asian stock markets were modestly weaker, and Europe opened with a risk off tone, as all markets are moderately lower. In the U.S., the S&P 500 futures traded up to a overnight high of 2361.75 just before the Tokyo open and traded sideways for much of the session. The ES broke down after the European open, pushing down to 2353.25, a tick above yesterday’s low, and has tried to form a bottom. As of 5:43 am cst, the last print in the in the ES is 2354.00, down 8 handles, on volume of 103k. However, as we continue to write, it is looking like the S&P’s are going to try to push to print a new low.
In Asia, 8 out of 10 open markets closed lower (Nikkei -0.45%), and in Europe 11 out of 11 markets are trading lower this morning (DAX -0.95%). Today’s economic calendar includes a 2-Yr FRN Note Settlement, New Home Sales, Consumer Sentiment, and the Baker-Hughes Rig Count.
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Today is T+3, and with January & February having surprised so well to the upside, it makes sense for some profit taking. On top of this, President Trump will address congress next week, laying out his tax plan and other ideas. There is some chatter that all the “buy the rumor” of Trump may turn to “sell the news”. One thing is for sure, volatility is at a low, and usually the largest breakouts occur after such a slow environment. The question is, how do we know the breakout? Well, it won’t start until the first 1% declining day in over three months.
Market Vitals for Friday 02-24-2017
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 10 open markets closed lower: Shanghai Comp +0.06%, Hang Seng -0.62%, Nikkei -0.45%
- In Europe 11 out of 11 markets are trading lower: CAC -0.97%, DAX -0.95%, FTSE -0.63% at 6:00am ET
- Fair Value: S&P -1.37, NASDAQ +0.85, Dow -20.71
- Total Volume: 1.55m ESH and 5.6k SPH traded
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