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Knock, knock. Who's there? No one. At 1:00 cst on Friday, the total trading range in the S&P 500 futures was a mere 4.5 handles. MrTopStep has a trading rule called the ‘walk away trade’ for the end of the month, quarter, and year, but we think we may have to change the rule to include holidays too. As the overall volume of the S&P futures has dropped over the years, it becomes even more apparent that traders are taking 3 day holiday weekends and turning them into 4 dayers.
While we all know volumes are ‘lower’ on holidays, the ES always did over 1 million contracts or more, but in the new world trading order, breaking 1 million maybe hard to do, and as the summer begins, we think volume will drop even further.
At 1:00 CT on Friday, total volume was only 639k, and of that 172k came from Globex, which means only 467k ES had traded so far. The big question is... Where have all the traders gone? We are not going to do a big play by play of Fridays trade, because plain and simple, there was none. Only 879k total ESM17s traded Friday, and that includes Globex. While You Were Sleeping
Overnight, there was an overall lower tone in global equity markets, as most of Asia was in the red, and the higher markets that were higher were barely positive. In Europe, all the majors are modest, to moderately, lower. In the U.S. the S&P 500 futures opened Sunday night at 2414.00 and pushed up to 2417.00, reaching a lid there throughout Monday’s globex session, before selling off down to 2409.75 early on in this morning’s Euro session. As of 7:30 am the most recent print is 2409.00 down 4.75 handles. For the 31.5 hours of globex so far this week, the total range has been 7.75 handles with volume just under 200k.
In Asia, 6 out of 11 markets closed lower (Shanghai +0.08%), and in Europe 9 out of 12 markets are trading lower this morning (FTSE -0.42%). This week’s economic calendar features Friday’s employment situation, along with 28 other reports, 2 Fed speakers, and 10 U.S. Treasury events. Today’s economic calendar includes Personal Income and Outlays, S&P Corelogic Case-Shiller HPI, Consumer Confidence, State Street Investor Confidence Index, Dallas Fed Mfg Survey, a 4-Week Bill Auction, a 3-Month Bill Auction, and a 6-Month Bill Auction.
Month End Profit Taking Sell #ES #CL
Our View: This week has a high level of economic reports. Like it or not, the ES is overdue for a pull back. I still see the 2420 area (2417.75 all time high) as resistance, and above that I have 2435 - 2440. That said, there are only two trading days left in May, and we could see some selling in the mix.
According to the Stock Trader's Almanac, the day after the Memorial Day holiday has the Dow up 21 of the last 30 occasions, but the week after the holiday has the Dow up 12 of the last 20. Thursday, the first trading day of June, has the Dow up 21 of the last 28 occasions.
Our view is that the ES has run a lot of upside buy stops, and the downside sell stops are starting to build up. For whatever reason, I get the feeling the futures may take a stab at some of those stops. If the ES is down on the open, look for a spot to be a buyer, but we lean to selling rallies. On the flip side of this, not everyone has come back from the weekend, so ‘thin to win’ is also a possibility.
PitBull: CLN osc -1/7 turns down on a close below 5254 ESM osc 24/3 turns down on a close below 240036 VIX osc -24/2 turns up on a close above 1013.
Market Vitals for Tuesday 05-30-2017
As always, please use protective buy and sell stops when trading futures and options.
- In Asia 6 out of 11 markets closed lower: Shanghai Comp +0.08%, Hang Seng +0.24%, Nikkei -0.02%
- In Europe 9 out of 12 markets are trading lower: CAC -0.60%, DAX -0.07%, FTSE -0.42%
- Fair Value: S&P -0.91, NASDAQ +1.64, Dow -8.34
- Total Volume: 879 k ESM and `k SPM traded