If it’s not one thing it’s another for people who trade futures and options for a living. It doesn't matter if you trade a small retail account or at a big prop trading firm, a bank or a hedge fund, the markets are slowing again and sending mixed signals across all sectors.In the last 5 years the markets have been hit by the credit crisis, budget negotiations, MF Global, PFG, the re-election of President Obama and most recently the fiscal cliff. All of this has had a wearing effect on the markets and its participants. In the first 11 trading days of 2013 the S&P has closed higher 8 times. After the big rally on the first trading day of the year, the S&P has only had one other day where it was up over 1% or 11 handles and one day where it closed up 5.8 handles. The other 8 trading days have not been up or down more than 4 handles. Clearly money continues to flow into the stock market, but it’s not showing up in the futures markets. I’ve talked to several traders in the interest rate options and order fillers and pit prop traders in the S&P options, and they all say the same thing. The lower volatility and the upcoming budget negotiations have traders stepping back again. Those traders need order flow to trade off of and there is not much of that going through any of the option pits. How long this slowdown lasts is anyone's guess, but we hope it doesn't last for much longer. MrTopStep’s Collective Intelligence presents Kathy Garber from Structural Trading: This Saturday, Jan. 19, MrTopStep will be hosting a webinar with Kathy Garber from Structural Trading. Kathy teaches how to trade harmonics and will be doing an introduction to this very useful method. What is harmonics? In a nutshell, emerging patterns give targets to the completion points or PRZs (potential reversal zones), places to scale or tighten your position. When volume profile levels correlate with harmonic levels, it strengthens their significance. Learn to spot the butterflies, bats, crabs and other harmonic fauna hidden in your charts! Sign up for this special event here. Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985. Our view: The S&P has been grinding higher all year. As we go into the end of the January expiration we think that will continue. The low volume and all the buy imbalances continue to work to the upside. 1484-1485 on tap. Small buy stops begin above 1479.70 up to 1484.00. As always, please keep an eye on the 10-handle rule and please use stops when trading. According to the Ned Davis S&P cash study for the January expiration: Thursday has been up 17/ down 12 of the last 29 occasions Friday has been up 16/ down 13 of the last 22 occasions Monday has been up 9/ down 13 of the last 29 occasions
- It’s 7:15 a.m. and the ESH is trading 1468.25, up 2.75 handles, crude is up 52 cents at 94.76 and the EC is trading 1.3379, up 83 pips.
- In Asia, 7 out of 10 markets closed lower (Shanghai Comp. -1.06%, Hang Seng -0.07%).
- In Europe, 10 out of 12 markets are trading higher (CAC +0.96%, DAX -0.04%).
- Today’s headline: “S&P Futures Edge Higher”
- Total volume: 1.23mil ESH and 9k SPH traded
- Fair value: S&P -0.03, NASDAQ +4.47
- Economic calendar: Today: Housing starts, jobless claims, Philadelphia Fed survey, natural gas inventories, Fed balance sheet, money supply and earnings from Bank of America, Citigroup, UnitedHealth, BB&T, BlackRock, American Express, Intel, Capital One. FRIDAY: Earnings from General Electric, Schlumberger, Morgan Stanley
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