S&P futures lowest level since April

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ES 09 14 8 8 2014 1024x494 S&P futures lowest level since April

S&P futures lowest level since April

The S&P 500 futures (ESU14.CME) slumped yesterday over ongoing concerns that the Russian army is preparing to invade Ukraine. These and other geopolitical concerns along with continued anxiety that the Federal Reserve might raise rates earlier than spring 2015 (as suggested by Richard Fisher and other Fed bank presidents) have weighed down on the S&P. 6 of the last 8 sessions have seen lower closes. At the end of the day the S&P futures closed down 9.6 points or 0.5%.

Gotta go up to go down

Patterns are and always will be a part of the S&P (^GSPC) and the newest one is a complete reversal of what we have been seeing for the last 19 months, that the S&P has to go down before it goes back up. The flip-flop in the price action now is that the S&P has to “rally before it goes back down.” It is a stunning turnaround for both the bulls and the bears. The S&P futures have been down 6 out of the last 8 trading days. The 6 losing days add up to -106.2 handles, the 2 winning days equal +15.4 handles for a total loss of 75.4 handles.

S&P cash study for the July expo (options expiration)

The S&P is pretty dug in on the downside right now and if feels like the negatives are overpowering the positives. However, sometimes the S&P can change directions during an options expiration. Today’s July expiration stats show the Friday the week before the expiration up 21 / down 9 of the last 30.

In Asia 10 of 10 markets closed lower and in Europe 10 of 12 markets are trading lower. Today’s economic and earnings schedule includes the productivity and costs number, wholesale trade and earnings from Magna International (MGA), Brookfield Asset Management (BAM), Susser (SUSS), and Bloomin’ Brands (BLMN).

S&P down 6 of the last 8

Our view: #1900.00. It was just over a week ago that the Nasdaq and S&P started working lower, but it feels like much longer than that. The S&P has the feel that it could go into a free fall, and it will if the Russians invade Ukraine. Along with President Obama ordering strikes on ISIS in Iraq this is where most of the market risk is sitting right now.

Today is the Friday before the August expiration and according to the S&P cash study it’s been up 21 / down 8 of the last 30, and while we do not doubt the markets can “pop,” we just don’t know that they will hold.

That said, we have learned all too many times that when we overlook the PitBull’s rule, that the market makes a low the Thursday or Friday before expiration, we regret it. We lean to buying the early weakness and selling rallies with the idea of looking for some type of low, but we are going to keep tight stops on the idea.

As always, please use protective buy and sell stops when trading futures and options.

  • In Asia 10 of 10 markets closed lower: Shanghai Comp. +0.31%, Hang Seng -0.23%, Nikkei -2.89%.
  • In Europe 10 of 12 markets are trading lower: DAX -0.72%, FTSE -0.57%, MICEX +1.1%
  • Fair value: S&P -4.48, NASDAQ -3.31 , DOW -51.31
  • Total volume: 1.95M ESU and 7.2K SPU traded
  • Economic and earnings calendar: Productivity and Costs, Wholesale Trade and earnings from Magna International (MGA), Brookfield Asset Management (BAM), Susser (SUSS), and Bloomin’ Brands (BLMN).
  • E-mini S&P 5001940.25+9.75 - +0.51%
  • Crude104.30-0.12 - -0.11%
  • Shanghai Composite0.00N/A - N/A
  • Hang Seng24890.34+200.93 - +0.81%
  • Nikkei 22515213.63+52.32 - +0.35%
  • DAX9169.97+100.50 - +1.11%
  • FTSE 1006659.61+27.19 - +0.41%
  • Euro1.3356

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 S&P futures lowest level since April
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