Still Have Gaps To Fill

Burt Doman always says that low volume rallies are not a positive, and over the last few days as the VIX has dropped so has the stock markets volume. After Sunday nights China news, total Globex volume in the S&P 500 futures was only 105,000, and Monday night to Tuesday mornings Globex volume was only 89.000. The only time that I have seen 89,000 ES trade on Globex is over Christmas, and even then I think it was higher.

Yesterday’s trade started with Global stocks extending their gains as worries about trade tensions continued to ease. The overnight trading range was 2730.50 to 2739.00, with only 89,000’ contracts traded. On the 8:30 bell, the S&P 500 futures pointed to a 0.2% rise, and traded 2738.50 on the open. The first move was a pop up to 2741.75, followed by a quick drop down to 2736.75. From there, the ES rallied and made a lower high 2741.00, and then made three lower lows at 2733.25, 2733.00 and 2732.50. The ES then rallied up to two lower higher 2739.00 and 2738.25 and then sold off down to 2733.25 at 11:40 am.

Basically from 9:15 to 2:00 the ES was stuck in a 6 1/2 handle range. At 2:15 the futures sold off to a new daily low 2728.50, breaking out of the range as the early MiM went from $143 million to buy to $271 million to sell. The ES then traded up to the 2731.00 level and made a new low at 2724.75 when the MiM went to $320 million to sell. On the 2:45 cash imbalance reveal, the futures traded 2525.50 as the MiM came out sell $1.3 billion. The ES made a low at 2571.50, traded 2724.50 on the 3:00 cash close, and went on to settle at 2725.00 on the 3:15 futures close, down -8.25 handles, or -0.23% on the day.

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Yesterday’s trade was about three things. The first was the total lack of volume. At the end of day only 846,000 ES futures traded, minus 89,000 from Globex, which means only 757,000 futures traded on the day. When you take out 70% (being nice) for the algos / HFT that means only 227,100 traded on the day session. That has to be record low volume. The other part was the big rotation; sell Russell 2000 / buy Nasdaq.

All day long the ES traded in a six handle range until late in the day when the NQ traded above the vwap up to 6931.50, and then flunked right after it made a late day high. And, last but not least, President Trump saying his June summit with North Korean leader Kim Jong Un “may not work out.” In the end it’s hard to believe the guys with the better seats didn’t know the MOC was going to be big for sale.

NEW YORK (Reuters) – U.S. companies announced $183.4 billion in share buybacks during the most recent earnings season, according to TrimTabs Investment Research.

The total buyback figure is the second-largest on record, TrimTabs said. The previous earnings season, in January and February, saw U.S. companies announce $191.4 billion in share repurchases.

The swelling figures for buybacks have been driven by the December U.S. tax overhaul, which lowered the corporate tax rate. Several companies have since directed their tax savings to share repurchases.

“The buyback boom early this year confirms our view that the main use of corporate America’s tax savings will be takeovers and stock buybacks rather than capital investment or hiring,” TrimTabs said in its report.