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Brian's Tuesday recap: Gap up and new DJIA record

Brian Shepard

Following yesterday’s disappointing ISM release, the S&P futures immediately spiked 5 handles lower to 1558 and held below that level for the balance of the day while most of Europe was on holiday. Overnight, European factory output sagged in February, which was before the Cyprus crisis and the Italian political quagmire. Markit’s Eurozone manufacturing data plunged to 46.8 from 47.9; this was the 20th consecutive month the index has contracted. However, the German and French PMI beat and Spain unemployment beat expectations while Cyprus eased some restrictions, which all led to a gap higher opening after yesterday’s huge buy-side closing imbalance in the broader market. Remember, it is the the first couple of days of the month, mid-month as well as the last couple of days of the month that money has the tendency to be put to work.   Collective Intelligence! We are now in the heart of the Q1 preannouncement season and traders will be watching the consumer trends a little more closely going forward for any hints to the coming earnings season. There have been many articles discussing the higher taxes on the consumer and the pocket picking at grocery stores as well as the higher prices at the pump.   Don’t miss this guy > @princetontrader aka Mike V posted his pivots http://t.co/T2uBOQz6dp  webcast http://t.co/haynyPwdgN  At (08:52CT) Mike posted his vol windows ES: 1568.25 x 1557.25 and NQ: 2821.5 x 2195.5.   Kathy has had some very good calls too! Charts posted by Kathy Garber @tbg4321. Harmonic rotations  CL http://screencast.com/t/66mbiO14   ES http://screencast.com/t/niord1xhopi   NQ http://screencast.com/t/5hnJVMfGsktl   During the Globex session 250k ESM and 1.4k SPM traded on Globex, trading range was 1563.70 – 1555.40. Monday’s regular trading hours (pit session) trading range was 1552.70 – 1564.60 before settling at 1555.90, down 6.8 handles. The opening imbalance showed an overall $468.75M x $120.36M, a modest net of $348M to the buy side following Monday’s huge closing imbalance of $1.1bil to the buy side.   Today’s RTH opening range in the SPM was 1561.70 – 1561.50, traded 1561.00 and up to convert Monday's high of 1564.60, electing small buy stops and buy programs following the 9:00CT factory orders data, checked in at 3.0 vs exp 2.9. 1566.70 printed at 9:09 before fading back to retest/hold yesterday’s high area. At (09:21CT) OEX gang getting real bullish now – a new high of 1567.30 printed at 9:51 followed by 1568. [GS] bought 25 big S&P’s, SPM at time – they bought about 3-400 as the DJIA traded up over 100 points, setting a new all-time high. From there the sideways to modestly lower trade set in through the lunch break.   At 12:00 the SPM was trading at the 1567 area in quiet fashion and at 1:00 the 1466 area. In a thin market the bid deteriorated and by 2:00 the 1563.50 area was trading followed by 1562 area at 2:30. The low-volume selloff was a mix of small sell programs and sell stops. The SPM was trading 1562.50 area when the 2:45 closing imbalance showed the broader market with a modest $330M to the buy side. [GS] bought 400 and [C] bought 200 going into the 3:00 cash close, which traded in the 1564 area before settling at 1564.40, up 8.5 handles on the 3:15 futures close.    Brian Shepard is a 20-year exchange member of the CME Group. _____________________________________________________   YOU WANT A LOOK AT WHAT OUR TRADERS SEE EVERY DAY? SIGN UP FOR THE IM TRIAL AT http://mrtopstep.com/free/ IT’S THE REAL DEAL! _____________________________________________________ Follow us on Twitter @MrTopStep https://twitter.com/mrtopstep Sign up for our free mailing list at http://mrtopstep.com/ for full report. DISCLAIMER: The information and data in the above report were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities.    {jathumbnailoff}