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Danny Riley

 After the big stock market dump in 2009, the S&P 500 futures have again proven that if you're a risk taker and willing to buy when everyone is selling, you will be rewarded. You don't have to adhere to Warren Buffett's style of finding value, you just have to be willing to put your money where your mouth is.  

After a shaky open Thursday morning, the S&P mounted an attack on the upside that left the S&P cash +0.26% above its old 1565 high, set Oct. 9, 2007. Over the last 13 sessions the  S&P has traded within 10 points of its 2007 high but hesitated over the uncertainty in Cyprus. The news temporarily stalled the S&P from making new highs, but all the short covering and buy stops only added to the upside buying pressure during the end of the quarter. While we pay attention to the futures level, the public looks at the cash, and the next obstacle will be the Oct. 11, 2007, high at 1576, reached just before the onset of the subprime bubble and the global financial meltdown.  

Buy U.S. /sell Europe: Like it or not, the Fed’s quantitative easing programs have helped push liquidity back into the system. Clearly the policies have helped support a turnaround in the housing market and have helped some of Wall Street’s heavyweights like Bank of America (BAC), JPMorgan (JPM) Citigroup (C) and Wells Fargo (WFC). But how long can the markets overlook the European Union's sovereign debt problems, gridlock in Washington and an ever-tightening fiscal cliff policy? While we continue to think higher prices -- 1585, 1610 -- we are also concerned about what's going to happen when the S&P does start coming down, but we don't think it will be in April and nor do Jeff Hirsch and Chris Mistal from the Stock Trader’s Almanac.


April Almanac: Rarely a Dangerous Month

By Jeffrey A. Hirsch & Christopher Mistal 

This April 1st is a busy day full of seasonal influences. As the first trading day of April and the second quarter, it has enjoyed exceptional strength over the past 18 years, advancing 15 times with an average gain of 0.6% in all 18 years for S&P 500. Declines occurred in 2001, 2002 and 2005. However, in 2013, April 1st is also the day after Easter, which has been the S&P 500’s worst post-holiday trading session. From 1984 to 2003, S&P 500 declined 16 times. In the nine years since, S&P has been up six times. Bullish April 1st influences will likely trump any post-Easter historical weakness this year. 


Below is a chart provided by Knight Trading showing    

                       GLOBAL YEAR TO DATE NET CHANGES 





Our view: Mondays generally start the week out on a slow note, and with London closed today and many people still coming back from the long holiday weekend, today has been quiet so far. We updated the MrTopStep Settlement / Close chart and clearly Mondays have not done well this year; of the 10 Mondays so far this year, we’ve had 4 up / 6 down with an average gain +4.33 handles and average loss -9.57, and then Turnaround Tuesday has been up 9 of of the first 12 Tuesdays with an average gain of +8.63 handles and an average loss -3.93 handles. The only thing we have to say is the mutual funds like to buy on the last 3 days and the first 3 days of a new quarter … let’s see how this plays out. As always, please keep an eye on the 10-handle rule and use stops.  

  • It’s 7:00 a.m. and the ESM is up 1.25 handles at 1564.00, crude is down 59 cents at 96.94 and the EC is down 2 ticks at 1.2821. 
  • In Asia, 7 out of 11 markets closed lower (Shanghai Comp. -0.09%, Hang Seng -0.74%, Nikkei -2.22%). 
  • In Europe, 10 out of 11 markets are trading higher (CAC +0.53%, DAX +0.08%).
  • Today’s headline: “S&P 500 Futures Unchanged After Setting New Highs”  
  • Total volume: 1.62mil ESM and 12k SPM traded 
  • Fair value: S&P +0.66, NASDAQ +3.86
  • Economic calendar: Chicago Fed National Activity Index, Dallas Fed Mfg Survey, Dennis Lockhart speaks at the economic outlook in Knoxville, Tenn. and Eric Rosengren speaks on Basel III in Seoul.  

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.