MrTopStep Best of 2012: SPOOKY THINGS HAPPEN AT THE END OF OCTOBER

dboy
January 8, 2013

By Danny Riley

You know it's serious when the New York Stock Exchange closes. It happened on 9 -11 and the days after, but in most cases nothing shuts the Stock Exchange. Here in Chicago, the Windy City, the CME Group trading floor got shut down with all futures contracts trading until 8:30 am Central time. Treasurys moved higher as traders wondered how all the economic data would be delivered throughout the week.

The exchanges have a reputation of never closing. There is even an old saying that the only reason the S&P 500 futures and options are always open late the day before a holiday is because the NYSE refuses to shut down, so when they announced the exchange was closing Sunday night we knew the weather conditions were going to be serious on the East Coast. Early Monday morning the NYSE said it was going to be closed Tuesday and possibly Wednesday, and all the exchanges followed suit.

Traders need clarity and with the markets closed it’s hard to determine the damage. So far the Labor Department has been unable to say it will release this Friday’s October employment report on time. They say they are working hard to ensure this Friday’s release and said they wouldn't assess how to handle reports until after the inclement weather had passed. The Conference Board announced it would delay the release of a reading on consumer confidence until Thursday.

The floors of the CME Group [CME]  were closed; however, some of the open outcry interest rate options traded until 11:00 CT. The New York Mercantile Exchange and Comex exchange both closed. However, energy and commodities continued to trade electronically.

Dow futures ended trading at 8:15 a.m. CT 61 points lower, or down 0.5%, to 12993. S&P 500 futures lost 4.85 points, or 0.5%, to 1402.75 and Nasdaq 100 futures were down 15.50 points, or 0.6%, to 2643.50.


S&P FUTURES: DOWN 6 OUT OF THE LAST 8

Thursday           Oct. 18      SPZ  -5.6 handles
Friday               Oct. 19      SPZ -27.5 handles (1424.00 settle)

Monday             Oct. 22      SPZ  +6.1 handles
Tuesday            Oct. 23      SPZ  -23.3 handles (1406.80 settle)
Wednesday       Oct. 24      SPZ  -1.5 handles
Thursday           Oct. 25      SPZ  +2.9 handles
Friday               Oct. 26      SPZ  -.60 handles

Monday             Oct. 29     SPZ - 4 handles

Our view:
The ESZ is open until 8:30 CT. Despite all the damage on the East Coast, we think the S&P is trying to hold the 1400 level. As always, keep an eye on the 10-handle rule and please use stops.

  • It’s 5:30 a.m. and the ESZ is down 2 handles at 1405.50, crude is up 17 cents at 85.17 and the EC is trading 1.2962, up 52 ticks.
  • In Asia 7 out of 9 markets quoted closed higher.
  • In Europe 11 out of 12 markets are trading higher (CAC +1.09%, DAX + 1.01%).
  • Today’s headline: “Sandy Storms Across East, Leaving Flooded N.Y. in Dark”
  • Economic calendar: Today: S&P Case-Shiller home price index, consumer confidence, Fed's Dudley speaks, Fed's Kocherlakota speaks; earnings from BP, Ford, Pfizer, UBS, Sirius XM, U.S. Steel, Valero Energy, EA, Take Two, Dreamworks, Shutterfly. WEDNESDAY: Weekly mortgage apps, Chicago PMI, oil inventories, Fed's Williams speaks, farm prices; earnings from Arcelor Mittal, GM, GlaxoSmithKline, MasterCard, Barclays, Clorox, Ralph Lauren, Time Warner Cable, Visa, Allstate, MetLife, Murphy Oil. THURSDAY: Challenger job-cut report, ADP employment report, jobless claims, productivity and costs, ISM mfg index, construction spending, auto sales, chain-store sales, Facebook's "gifts" event, Fed's Lockhart speaks, Fed's Rosengren speaks; earnings from ExxonMobil, Royal Dutch Shell, Cigna, Kellogg, AIG, Chesapeake Energy, Hartford Financial, Newmont Mining, Starbucks, Open Table, WebMD, Yelp. FRIDAY: Non-farm payrolls, factory orders, Fed's Williams speaks, Wynn shareholders meeting; earnings from Chevron.
  • VOLUME: 181k ESZ and 1.4k k SPZ traded
  • SPREADS: SPZ/H spreads traded (none)

MrTopStep Closing Print Video: http://www.mrtopstep.com/videos/#vid-top

View photos

Brian's Monday recap: Our thoughts and prayers go out to the people affected by Hurricane Sandy. We wish them the best and safety to themselves, their families and their neighbors.

Aside from Hurricane Sandy - the Eurozone was weak in the premarket as Italy, Spain, Greece and Germany topped the headlines. Former Italian PM Berlusconi may be out as PM, but he is questioning / fighting the sitting government and the austerity / 2013 budget proposal. Spain is dealing with the highest unemployment in the region and their retail sales data fell almost 10% with confidence eroding as a value added tax went into effect. Germany appears to be softening on the Greek bailout adding more monies and time.  However, the storyline of the day/week is obviously Hurricane Sandy and what is about to take place and where will it hit - the most densely populated region of the US.

Morning observations: Transportation in the northeast region will be a struggle to put it mildly... In the early morning, we heard from friends well inland that sustained 50+ mph winds and heavier rains were causing damage and unsafe conditions. Connecticut announced they were closing their roads at 1:00PM. This means that a large part of the hedge fund community and HFT’s would be off line today and less havoc would likely hit the markets that remained open. Mayor Bloomberg announced the New York schools will be shot tomorrow due to transportation problems - so we speculate the NYSE will once again have a hard decision to make and or the real possibility of - the decision being made for him...

Randy Jenkins,, (10:35:33): chest high water in Ocean City MD.......can't get in over the bridge....the seawall is being breached downtown and the ocean front properties are getting whacked....we lost our fishing pier last night.....my friends in Cape Isle of Wight neighborhood have 2.5 feet of water over the road....all garages flooded....my old neighbor has the bay in his yard and a runaway boat that drifted off its boat lift being blown toward his house....he just ran outside with his shotgun and blasted holes in the boat in an attempt to sink it before the boat slammed into his house.......forget oil and the other commodities....I'm getting long shot guns and sump pumps!!!!! tonight is going to be nutzo at the Jenkins house....got 35 gallons of gas for the generators.....no drinking till noon was my rule when i woke up this morning.......26 more minutes!!!

Jamie Dimon: CEOs Already Cutting Back Due to 'Fiscal Cliff' - YAHOO! http://bitly.com/SFslpZ

Connecticut announced they were closing their roads at 1:00PM. This means that a large part of the hedge fund community and HFT’s would be off line today and less havoc would likely hit the markets that remained open.

Dept. of Labor Web site:                                                                                                                          
Labor Department may delay last jobs report before the election..
Citing the weather, this Friday’s October jobs report may be delayed along with other releases this week, the Wall Street Journal is reporting.  There are 3 reports scheduled this week from the Labor Department, Wednesday is employment costs, Thursday weekly jobless reports and on Friday the October jobs report.

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CONTRIBUTORS’ CORNER

SPX CHARTS

Richard Chappell, Channels & Patterns

(Monday) A very unusual day today as Hurricane Sandy is closing all New York markets for the day, including futures outside Globex hours. Today is effectively therefore a forced market holiday, so I'll just do a quick post for the futures traders and as an advance on tomorrow, though markets may well be closed for the same reason tomorrow of course. 

ES is trickling down a support trendline on the 60min. Support there is at 1393.25 this morning and if it continues to trickle down it can reach strong support at 1388 on this trendline tomorrow:

View photos

 

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