The S&P 500 Futures: Donald Trump, From Cheers To Fears
MrTopStep | Feb 01, 2017 01:11AM ET
When the S&P 500 futures (ESH17:CME) traded up to 2299.75 last week, it did what it had to do. While the ES futures just missed the big round 2300.00 print by a tick, it did, for all practical purposes, trade at another big milestone. With the Dow Jones futures up nearly 12% since Donald Trump won the election, most traders had already decided that the ‘risk reward’ for buying was beginning to look less optimistic after such a large rally. A pullback going into the end of the month seemed at least possible.
After the globex gap open Sunday night, the S&P futures made a new overnight low of 2279.25 before the cash open. On the 8:30 am cst bell, the ESH17 printed 2281.00, went a tick higher, and then began to sell with intensity for the first hour of the session. The futures broke all the way down to 2263.25, 17.75 handles from the open, and more than 25 handles from Friday’s close.
While the S&P’s looked weak, it was hard to resist buying them in what was the major price zone over the course of January. The early 9:45 am cst low turned into a fair buy opportunity, as the index futures pushed up going into the Euro close, then traded sideways for much of the session. Eventually the futures began rallying higher into the close, making up more than half of the days lost ground trading up to 2277.00, before settling at 2276.25, down 12.75 handles on the day.
Just a day after Friday’s slow sub one million volume day, the S&P’s broke out, doubling Friday’s volume, and trading over 1.8 million yesterday. People tend to want to dismiss it when I say it’s Trump’s market, however, yesterday was just another example.
Even with yesterday’s equity selling, the week is just warming up. It couldn’t have been the biggest surprise that with the Dow 20K and S&P 2300 there could be some profit taking going into the end of the month. Today closes out January, but also begins the two day FOMC meeting, then we cap it off with Friday’s NFP. The week certainly opened with selling, but how this week closes may be the real tell.
h2 While You Were Sleeping/h2Many of the Asian benchmarks were still closed due to the Chinese Lunar New Year, but the open markets traded weaker overnight, including Japan’s 1.69% sell off as the Bank of Japan’s meeting concluded. In Europe, most markets are trading modestly higher this morning. The S&P futures traded weak early overnight, pushing down to 2268.25 early in the Tokyo session, before trading sideways into the European open. From there, the ESH17 bounced up to 2275.00, and has last printed 2273.50, down 2.5 handles, on volume of 121k.
Get The News You Want
In Asia, 8 out of 8 open markets closed lower (Nikkei -1.69%), and in Europe 8 out of 11 markets are trading higher this morning (FTSE +0.57%). Today’s economic calendar includes a 2-Yr FRN Note Settlement, a 2-Yr Note Settlement, a 5-Yr Note Settlement, a 7-Yr Note Settlement, a 10-Yr TIPS Settlement, the FOMC Meeting Begins, Employment Cost Index, Redbook, S&P Corelogic Case-Shiller HPI, Chicago PMI, Consumer Confidence, State Street Investor Confidence Index, a 4-Week Bill Auction, a 52-Week Bill Auction, and Farm Prices.
h2 Our View/h2The ES was down 7.75 handles overnight and started up-ticking around 6:00 am. As I said on Periscope yesterday, ‘there are not that many down days in the S&P lately.’ Getting 2 down days in a row happens once in a while, but three down days in a row just doesn’t happen very often. 10 out of the last 12 Tuesdays have been up, and while I think the ES could rally further this morning, I am not real confident that the rally will hold. Everything President Trump does is picked up by the news wires, and from there it’s in the algos hands. Our view is to sell the early rallies and buy weakness using tight stops.
Market Vitals for Tuesday 01-31-2017
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 8 out of 8 open markets closed lower: Shanghai Comp closed, Hang Seng closed, Nikkei -1.69%
- In Europe 8 out of 11 markets are trading higher: CAC +0.18%, DAX +0.09%, FTSE +0.57% at 6:00am ET
- Fair Value: S&P -4.46, NASDAQ -3.31, Dow -68.02
- Total Volume: 1.8 ESH and 2.9k SPH traded
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