“Turnaround Tuesday” was back as investors took advantage of bargain prices in tech stocks and other sectors that took a beating in March. The Dow Jones industrial average (^DJI) rose 10.27 points or 0.06 percent, to end at 16,256.14. The S&P 500 (^GSPC) gained 6.92 points or 0.38 percent, to finish at 1,851.96. The Nasdaq Composite (^IXIC) added 33.234 points or 0.81 percent, to close at 4,112.986.
After three days of choppy downtrends, the S&P futures [CME:SPM14] took one last dip in the morning before rallying after the release of the JOLTS report at 9AM CT, showing big growth in job openings. This builds on last week’s positive jobs numbers, showing the economy is finally creating jobs at 2008 levels. The June S&P Emini futures [CME:ESM14] stopped just short of the “big number” of 1850, topping at 1849 and closing at 1829.50.
FOMC minutes release at 1PM CT
Don’t forget that at 1PM CT the Fed will release the minutes of its February meeting. While much of it can be guessed from the almost daily speeches of one Fed president or another, the minutes may contain details not previously mentioned. Yesterday, Narayana Kocherlakota said in his speech that the Fed may not be doing enough on unemployment and that he sees the taper on track for the next several meetings.
Buy stops waiting above 1850
We said yesterday that if the S&P can clear 1850, it will hit buy stops all the way up to 1863. On the downside, the sell stops remain below 1830—the downside “big number” we didn’t hit yesterday. We expect further upside today and if we hit those first buy stops above 1850, the buy programs will run us up pretty quickly from there. You can sell an early rally, but waiting to buy weakness is where it’s at. Watch out for volatility around 1PM CT when the FOMC minutes are out.
The Asian markets closed mostly higher and the European markets are mixed to slightly higher. On today’s economic calendar: the MBA Purchase Applications, Wholesale Trade, EIA Petroleum Status, 10 Yr- Note Auction , FOMC Minutes, Chicago Fed President Charles Evans speech on Fed communications in Washington and Federal Reserve Gov Daniel Tarullo dinner speech in Washington.
S&P up 6 of the last 8 days
After getting whacked around last Friday, April 4, -22.9, and Monday, April 7, -22.0, the ESM14 retested the low it made on Monday after the Russian Crimean annex vote. While yesterday was filled with some big ups and downs it also looked like the S&P was back and filling. We think it’s critical not to lose sight of what “usually” happens after a 50- or 60-handle selloff in the S&P. This morning we have some numbers to get past, the Fed minutes and some Fed speak. While yesterday’s volume was decent, it was not as large as the last two days and the overall tone / selling seemed to let up. Our view is we think the S&P has a potential to trade back above 1860. After dropping 44+ handles in two days the ESM made back 6.9 handles yesterday; if the ESM14 gets back above 1850 and holds, it’s all buy stops back to to 1863. If the ESM14 does not hold, it’s all sell stops under 1830.50 down to 1820. My gut says we are going back up.
Webinar Tomorrow at 2:15PM CT!
Please join us for the April 10 webinar with MrTopStep’s Marlin Cobb (aka RedLionTrader) featuring the MiM (MrTopStep Imbalance Meter) This will be a rare opportunity to hear from someone who not only designed the MIM but trades it every day.
As always, keep an eye on the 10-handle rule and please use stops when trading futures and options.
- In Asia, 10 of 11 markets closed higher: Shanghai Comp. +0.33%, Hang Seng +1.09%, Nikkei -2.10%
- In Europe, 7 of 12 markets are trading higher: DAX +0.24%, FTSE +0.78%
- Morning headline: “S&P futures seen higher ahead of Fed minutes and earnings”
- S&P fair value: 1845.46 (futures 1.79 higher at 1847.25)
- Total volume: 1.85M ESM and 3.2K SPM traded
- Economic calendar: MBA purchase applications, wholesale trade, EIA petroleum status, 10-year note auction, FOMC minutes and Charles Evans and Daniel Tarullo speak.
- E-mini S&P 5001817.00-10.00 - -0.55%
- Crude103.15-0.25 - -0.24%
- Shanghai Composite0.00N/A - N/A
- Hang Seng23003.641-183.32 - -0.79%
- Nikkei 22513960.05-340.07 - -2.38%
- DAX9283.92-170.62 - -1.80%
- FTSE 1006559.02-82.95 - -1.25%