The S&P is going up again, making new record highs, and this Friday the estimates for the non-farm payrolls number may add to the push higher.
The S&P 500 [SNP:^GSPC] traded into its second record close in 2014 one day after the previous record close on Tuesday, ending the session up 5.38 points or +0.30%.
The Dow Jones [DJI:^DJI] closed up 49 points or +0.20%, closing at its highest level in 2014 and off just 0.10% from its all-time contract high of 1657.66 on Dec. 31. The Nasdaq Composite added 8.42 points or +0.20%.
Up, up and away
The S&P futures [CME:SPM14] is up 2.3% on the year, but the gains have not come without some heartache for the short sellers. The -5.8% decline that started in the middle of January to the first trading days of February was what we call a gigantic false start, but that drop also goes back to the overall price action of the S&P itself. The overall pace of the advance is considerable slower than last year’s 10% first-quarter gain and eventual 30% gain.
For me it all comes down to dollars and cents. While the gains may not be as big this year, the Federal Reserve is now going into its third taper, while the index is up 8.1% from its low and still going up, at a time of increased talk of higher rates.
This choppier market has shown an astounding level of resilience in its continued advance. As of yesterday’s close the S&P 500 is up 180% since making its March 2009 low.
645 days since last 10% correction
The S&P has bent but not broken. This year’s downside failure has fueled the S&P to another all-time contract high. The popular idea was that the S&P would not see the gains it did last year but despite yesterdays small gain the S&P made its 51st record high in a year yesterday. Both the 645 days without a 10% correction and the 51st new high in a year are not only astounding but also show no signs of a major reversal.
The Asian markets closed mostly higher and Europe is trading mostly lower. On today’s economic calendar are the Challenger job-cut report, Gallup US Payroll to Population, international trade, jobless claims, PMI Service Index, ISM Non-Mfg Index, natural gas report, 3- & 10-year note and 30-year bond auctions, Fed balance sheet and money supply. We told you the funds sold the winners last week and we told you they would be buying them back this week and it’s not over.
Down 5 in a row / up 4 in a row
March 21 -9.1, March 24 -7.6, March 25 -9.8, March 26 -16.7. March 27 -2.0 = -45.2 handles
March 28 +9.8, March 31 14.2, Apr 1 +13.2, Apr 2 +5.1 = +42.3 handles
There are some big economic reports to get past this am. If things go according to plan the S&P will rally off of the good or bad news. Thin to Win is working big time in the ESM14. I know you can play both sides, but I have found it an easier trade buying weakness and avoiding the sell-rallies stuff. I know you can make money on the short side but the overall price action of rallying, pulling back and rallying again has been very prominent.
One of the rules we follow is that the funds tend to put new money to work on the first three days of a new month. However, this week marks not just a new month but a new quarter and they have been shoving the cash in (i.e., the $1 billion to buy on yesterday’s close).
I said yesterday that there was key resistance at the 1885.00 to 1890.00 level and the high turned out to be 1886.25. The reason the S&P sold off while there was $1 billion to buy is simple; everyone expected it. Let’s not get ahead of ourselves. Yes, the S&P is going up, but don’t expect it to “explode” higher after such a big push. If the S&P is going up today it’s going to be from lower prices.
Sign up for the April 12th 2014 webinar featuring Jeffrey Hirsch from the Stock Traders Almanac and Danny Riley from MrTopStep End of the Best 6 Months for Stocks
04/12/2014 11:00 CT
End of the Best 6 Months for Stocks — An open discussion on where stocks are now and where they are going
- Midterm Election Year History & Tendencies
- End of the Best Six Months Strategy
- Sell in May but Don’t Go Away
- Q2/2014 Outlook
- Summer Shorts
- Sector and Commodity Seasonal Set-Ups
Bonus! A chance to win a copy of the 2014 Stock Traders Almanac (A $50 value)
As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.
- In Asia, 7 of 12 markets closed higher: Shanghai Comp. -0.74%, Hang Seng +0.18%, Nikkei +0.84%
- In Europe, 11 of 12 markets are trading lower: DAX -0.10%, FTSE unch’d
- Morning headline:“ S&P futures seen higher ahead of jobless claims”
- S&P Fair Value: 1883.65 (futures 1.10 higher at 1884.75 as of 6:39AM CT)
- Total volume: LOW 1.18M ESM and 5.7K SPM traded
- Economic calendar: Challenger job-cut report, Gallup US Payroll to Population, international trade, jobless claims, PMI Service Index, ISM Non-Mfg Index, natural gas report, 3- & 10-year note and 30-year bond auctions, Fed balance sheet and money supply.
- E-mini S&P 5001840.25+2.25 - +0.12%
- Crude100.73-0.41 - -0.41%
- Shanghai Composite0.00N/A - N/A
- Hang Seng22377.15-132.93 - -0.59%
- Nikkei 22514808.85-254.92 - -1.69%
- DAX9510.85-184.92 - -1.91%
- FTSE 1006622.84-72.71 - -1.09%