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Danny Riley

While the S&P has stutter-stepped over the past few sessions on its approach to S&P 1600, let’s not confuse the debate. The S&P has closed higher 8 out of the last 11 sessions.
Patience is a virtue
For a long time traders flocked to the S&P because of how quickly it moves. Depending on what side you're on, that could be a good or a bad thing, but either way it’s always moving. The S&P futures have always been the king of the hill for futures traders, but the game has changed. It still moves fast, but it’s the type of moves that concerns us. Before electronic trading, traders could be down and trade their way out of a loss, but in today’s world an impatient trader can lose over and over again. In today’s high-flying world of algorithmic trading, patience has become a virtue.
Jumping the gun
Every time the S&P rallies above 1590 the crowd gets all bulled up and every time it drops 10 or 15 handles the world is coming to an end. There is no predicting the exact time when the S&P is going to trade 1600, but there is also nothing telling us that it won't. Out comes some bad economic news, down goes the S&P and the next day it’s back to business as usual, hammering away on the upside. With all the lower volumes, it’s clear to see that the S&P has to go down before it goes back up.
The stats are the stats
This has been an astonishing year for the S&P 500 futures. So far there have been a total of 84 trading days, 55 higher closes, 28 lower closes and 1 unchanged. While there has been a pickup in the size of the down days, the sheer number of up days continues to hold the S&P on all-time new contract highs and just a stone’s throw away from 1600. All of this has worked in favor of the upside this year.
If we have learned anything about the S&P, it’s that it doesn't always do what you want it to do when you want it to do it. Recently all the selloffs have done is add fuel to the upside fire. Fridays have been kind to the S&P futures this year. Of the 17 Fridays this year, 11 have been up and 6 down. 1610 or 1580? You make the call ...
Our view: It has been a long week of ups and downs backed by both good and bad economic reports. We said last month's jobs report was going to come in lite and we are thinking the exact opposite this morning. We don’t have to keep saying it, but there are a boatload of stops from 1596 up to 1606. If perhaps the S&P does go flying up, our next concern would be MrTopStep’s “Counter Trend Friday” rule. See MrTopStep Trading Rules 101.  http://mr-topstep.com/images/pdf/MTS-Trading-Rules-101.pdf.  
We are leaving it like that. 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 1591.50, down 3 ticks; crude is up 42 cents at 94.41; and the euro is up 60 pips at 1.3121.
  • In Asia, 6 out of 11 markets closed lower (Shanghai Comp. +1.44%, Hang Seng +0.10%, Nikkei -0.76%).
  • In Europe, eight of 12 markets are trading higher or unched (CAC +0.29%, DAX +0.19%)
  • Today’s headline: “U.S. Stock Futures Are Little Changed Before Jobs Report”
  • Total volume: 1.56mil ESM and 5k SPM trade
  • Economic calendar: Nonfarm payrolls, factory orders, ISM non-mfg index and earnings from Berkshire Hathaway
  • Fair value: S&P -0.84, NASDAQ -0.44

MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/video/latest/closing-print-5-2-2013
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.
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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}