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Danny Riley

From the Bitcoin burst to Goldman, JPMorgan and other Wall Street darlings getting the leaked Fed minutes before the release to new contract highs in the S&P and Dow, all MrTopStep has to say is it’s all part of the New World Trading Order.

Most of us are well aware that some Wall Streeters have always had a big edge over the regular guy just trading his futures or stock account, but yesterday was proof positive. Then you throw in all the algos and what do you have left? It’s called an unfair playing field, and it’s time for all of us to stand up and start complaining about it. Yesterday the Pit Bull reiterated again what he has said for years: that the game is rigged. He doesn't mean at the exchange level, he means that some people get privileged information that we never even know about. But I don't care to say any more about that, every news service in the world has done a story on it and as I have always said, you didn't come here for that.

Never in doubt
Sure there have been times that we have said sell the rally and buy the breaks, but the overall mindset has always been higher prices. Over all the years of reading the boards and learning pattern recognition, it all comes down to one thing and one thing only. As long as the world’s central banks are flooding the markets with new money, the S&P 500 futures will continue to back and fill and make new contract highs. In a zero rate environment, money is flooding back into the stock market.

Pit Bull: Worldwide rally
I consider myself the PitBull’s confidant. Whether he likes it or not, I have been his guy for nearly 25 years. I am his streetwise friend who looks out for him 24-7. The Amherst grad and the floor guy from the CME. It’s been an amazing run and it continued yesterday when he told me that he was amazed over the Fed minutes leak but was not surprised. He also went on to say that he has never seen a worldwide rally in stocks like we are seeing right now. And he went on to say he could not believe how they crushed the yen from 108 down to 100 and how we were told in advance. He said Soros must have made a ton!

Too high to buy and too firm to sell
What do you do as an investor? You lost money when Bear Stearns and Lehman went out of business, you went into cash to sit it out and now the S&P 500 is up almost 135% from the October 2009 lows. This is also the main reason for the markets continuing higher, it’s called chasing returns and there is a tendency for this not to end well.

Right now we think the S&P is still going up, but we also are concerned about North Korea doing a ballistic missile test and the possibility that Japan or the U.S. will shoot it down and the news story that a Chinese expert on North Korean affairs is warning of a 70% chance of war in the Korean Peninsula. China is not doing anything and with the North Korean holiday coming up on April 15 it may be a good idea to lower your risk. Thermonuclear war would be limit down. The CME chart and link that we put up today are the new market-wide circuit breakers. As we have said many times, the higher the S&P goes, the harder it will fall.

Our view: We have been targeting 1585 for over 3 months now and we’ve met our objective; now we are targeting 1610. We called yesterday a meltup and that is exactly what it was -- a very pent-up, long overdue burst to the upside. Is there more to come? We think so. Over the last few weeks I have tried to do my best to warn people about fighting the trend and just going with it instead of trying to sell it, and that reached an extreme yesterday as the ESM started taking out long-term buy stops and pressing into new contract highs. Our view is simple: The S&P is still going higher, so you have two choices -- sell the early rally (did not work yesterday) and buy weakness, or just buy the dip. As always, keep an eye on the 10-handle rule and PLEASE make sure you're using stops.

  • It’s 7:00 a.m. and the ESM is trading 1582.50, down 1 tick; crude is down 13 cents at 94.51; and the euro is up 71 pips at 1.3135.
  • In Asia, 9 out of 11 markets closed higher (Shanghai Comp -0.30%, Hang Seng +0.30%, Nikkei +1.96%)
  • In Europe, 11 out of 12 markets are trading higher (CAC +0.51%, DAX +0.53%).
  • Today’s headline: “S&P Futures Set for Higher Open Ahead of Jobs Data”
  • Total volume: 2mil ESM and 9.7k SPM traded
  • Economic calendar: Chain store sales, Charles Posner speaks, jobless claims, Jane Bullard speaks, import/export prices, nat gas, Fed balance sheet, money supply
  • Fair value: S&P +0.22, NASDAQ -7.11

MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/video/latest/closing-print-4-10-2013

CMEGroup Price Limits = http://www.cmegroup.com/trading/equity-index/price-limit-guide.html

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.