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A time to trade and a time to stand aside

Danny Riley
floor confetti A time to trade and a time to stand aside

I know that traders are always game, but this is not the time. In the old days the locals in the S&P pit used to love to come in during the holidays because there were opportunities when fewer locals were in the pit. That’s not how it works today.

Despite what the CME volumes show, 75% of all the big contract S&P volume is EFPs (Exchange for Physical) or come from an S&P option that is tied to the futures and doesn’t have to trade in the S&P pit. [^GSPC:SNP]

So the next time you see the SPH (the full, not e-mini, contract traded in the big S&P pit) showing 9,000 volume, maybe 1.5k to 2k of that actually traded in the pit. On a really good day maybe 3k or 4k trade, but that’s a rarity.

You have to pick your time and place, and flipflopping ESH futures around right now may be hard to do. If you want to trade into the Santa Claus Rally we suggest buying a few cheap calls and letting them do the work for you.

Stock Traders Almanac explains the Santa Claus Rally.

Our view

It’s nice if you pick up a few bucks over the next few days, but you will hate yourself if you lose.

Please look at Tuesday’s total ESH volume (314k included Globex). I know it was only a half day but even then it’s a horribly low number and it shows a total lack of participation.

Ideally we lean to pricing some cheap January calls today with the intent of spreading out the buys over the next few days. I have been bullish all year and I still am.

And if you do get into the markets, as always don’t forget the 10-handle rule and please use stops…

New Year’s 2014 CME schedule (PDF).

  • In Asia, 8 of 10 markets closed higher: Shanghai Comp. -1.58%, Hang Seng +1.13%, Nikkei +1.03%
  • In Europe CLOSED for Boxing Day and second day of Christmas.
  • Morning headline: “Markets Experience Extremely Low Holiday Trading Volume”
  • Total volume: LOW 314kk ESH and 3.9k SPH traded
  • Economic calendar: Jobless claims, EIA petroleum status report, 3- and 6-month T-bill announcement, Fed balance sheet and money supply
  • E-mini S&P 5001836.25-0.25 - -0.01%
  • Crude98.55-0.22 - -0.22%
  • Shanghai Composite0.00N/A - N/A
  • Hang Seng23244.869+1.629 - +0.01%
  • Nikkei 22516291.31+112.369 - +0.69%
  • DAX9552.16-37.229 - -0.39%
  • FTSE 1006725.86-25.01 - -0.37%
  • Euro1.3789
A time to trade and a time to stand aside