U.S. Markets closed


Danny Riley


While traders are complaining more about the “unlevel” playing field, there are no rules limiting the practice of program and algorithmic trading. Every day traders are feeling the pinch of the quick jolts these programs produce. If your timing is off or your stop was in the wrong place, one or more of these programs have probably had a negative effect on your account balance. An example would be that you’re short or long at a price and just before the ES moves in your favored direction one last little program knocks you out of your position. It happens all the time.

April showers bring May flowers
There has been an exceptional high level of talk this year about the “sell in May and walk away” trade. The question MrTopStep brought up yesterday was how this would all play out after the downside shower (60+ handle selloff in April) and the subsequent rally back to new highs. Thus the shower and the flowers.

S&P 1600
There has been a high level of anticipation over S&P 1600 over the last few weeks and every attempt has failed. The difference today vs the other attempts is the timing. Unlike the 1588 and the 1593-1594 old high, it did not come at the end of the month. There was no end of the month, beginning of the month rebalancing going on. This attempt has all the correct timing and is being backed by a steady flow of new money being put to work, as we saw in yesterday’s closing imbalance of $1.4bil to buy.

Rock’em Sock’em Robots
It was clear to see that the robots had a great deal to do with yesterday’s push to the high. One of the ways to gauge that the robots are hard at work is the “9:00” buy program that shows up just about every day. This program used to show up exactly at 9:00 a.m., but over the last few months it has been going a little early. Today I want you to keep an eye on 8:40 CT or just a little after. If you see the S&P cash start to move up around that time you will get your first look at how the rest of the day may play out.

S&P 1600 is just another bump in the road to S&P 1650 and beyond ...

Our view: Today’s trade starts with a bucketload of economic reports. It's our guess that some will come in OK and some won't, but that will not stop the S&P from going up. There is an extremely high level of anticipation over S&P 1600, so don't let this cloud your thought process. Our deal is to get in and get out. We do not think we have to press this subject anymore, we have been saying all year the S&P was on its way to 1600 and here we are. As always, keep an eye on the 10-handle rule and PLEASE use stops when trading the S&P.

  • It’s 7:15 a.m. and the ESM is trading 1593.75, up 1.5 handles; crude is down 1.50 at 91.96; and the euro is up 70 pips at 1.3236.
  • In Asia, 7 out of 11 markets closed higher (Shanghai Comp. +0.69%, Hang Seng +0.60%, Nikkei -0.44%).
  • In Europe, 7 out of 12 markets are trading higher (CAC -0.31%, DAX +0.51%)
  • Today’s headline: “New All Time Globex High, S&P 1600 On Tap”
  • Total volume: 1.55mil ESM and 9.3k SPM traded
  • Economic calendar: Motor vehicle sales, MBA purchase apps, ADP employment numbers, PMI manufacturing index, Treasury refunding announcement, 3yr and 10yr note announcement, ISM Mfg index, Construction spending and the FOMC meeting announcement.
  • Fair value: S&P -6.12, NASDAQ -3.87

MrTopStep Closing Print Video: https://mr-topstep.com/index.php/multimedia/video/latest/closing-print-4-30-2013

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.