U.S. Markets closed

S&P 500 FUTURES: APRIL NOT THE CRUELEST MONTH

Danny Riley
mtsop-04292013

Aside from the normal ups and downs of the S&P 500 futures, last week's fake attack on Twitter and the CBOE’s computer glitch were all part of a very long week for the markets.

With two trading days left in April it may not have felt like a good month, but when you look back it actually was. On the first trading day of April the SPM settled at 1555.90, rallied up to the new contract highs at 1593-1594, sold off back down to 1531, taking out the old 1533 low, and popped back up to 1588 last week, leaving the S&P only 5 to 6 handles off its contract high and only 12 handles off S&P 1600.

Markets end mixed
The S&P and the NASDAQ futures snapped a five-day winning streak on Friday, the Department of Commerce numbers came in lower than expected -- 2.5% vs. the 3% forecast -- and a drop in consumer sentiment in April to 76.4 from 78.6 in March helped add to the weakness. Despite the selloff and the late short covering rally, there was just not enough gas left in the tank to push the futures back up on the close.

S&P earnings
Before the earnings started, most analysts predicted a terrible earning season but that’s not how it’s gone up to this point. With 50% of the S&P 500 companies already reporting results, 69% of those firms have beat expectations and 20% have missed, according to Thomson Reuters. Additionally, if the other 50% of the companies report in line, S&P earnings will be up 3.8% from last year's first quarter.

Year to date performance
The start of 2013 has been an amazing run for the U.S. major indexes. Last week the Dow settled at 14,712, up +1.13% on the week and up +12.27% YTD. The S&P 500 cash settled at 1582.24, up +1.74% on the week and up +10.94% YTD. The Nasdaq settled at 3279, up +2.28% on the week and up +8.60% YTD. The Russell 2000 settled at 935, up +2.49% for the week and up +10.11% YTD. And the CBOE’s VIX settled at 13.61%, down -9.08% on the week and down -24.50% YTD.

Takes a licking and keeps on ticking
If you're wondering why I put up the net changes, there are a lot of reasons, but the main one is how resilient the S&P has been this year. Sure the S&P futures have had some pullbacks, but none as large as the most recent one. Over the 28 years that I have been in the S&P futures I have never seen a rally like the current one. No one is saying it now but we were saying at the end of February that we had not seen the S&P go up like it has since the weeks leading up to the 1987 crash. Well, we are well beyond that that if you take the overall (not just during the latest selloff); the S&P futures are still back and filling. No one knows exactly when the S&P is going to trade the big figure at 1600, but rest assured it’s not long off.

Our view: As a whole, Mondays have not had a winning record this year (14 Mondays: 6 up / 7 down / 1 unched ave. gain +6.4 handles ave. loss -13.7 handles) Tuesdays have been the best performing day of the week ( 16 Tuesdays: 13 up / 3 down ave. gain +10.24 handles ave. loss -3.9 handles). Our view is to sell the early rally and buy the pullback. The S&P is loaded with buy stops from 1588.70 up to 1596 and again above 1599 up to 1603-1604. Additionally, Wednesday, the first trading day of May, has the Dow up 12 of the last 15 occasions. As always, keep an eye on the 10-handle rule and please use stops when trading futures.

  • It’s 7:15 a.m. and the ESM is trading 1582.50, up 6 handles; crude is up 33 cents at 93.33, and the euro is up 76 pips at 1.3109.
  • In Asia, 7 out of 11 markets closed higher (Shanghai Comp. -0.97%, Hang Seng +0.15%, Nikkei -0.30%).
  • In Europe, 9 out of 12 markets are trading higher (CAC+ 0.78%, DAX +0.32%).
  • Today’s headline: “Global Shares Rise, S&P and Euro Trade Higher”
  • Total volume: LOW 1.33mil ESM and 5k SPM traded
  • Economic calendar: Personal income and outlays, pending home sales, Dallas Fed mfg. survey
  • Fair value: S&P +4.36, NASDAQ +7.85

MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/latest-you-tube-videos/danny-riley-closing-print/video/latest/closing-print-4-26-2013
MrTopStep S&P 500 Net Changes - Quarter 1:
https://www.mr-topstep.com/images/2013/April/mtssp-ytdapr29.jpg

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.
_____________________________________________________
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}