Yesterday’s trade in the S&P 500 futures (^GSPC:CME) was probably a good example of things to come. With only 13 trading days left in the year and Christmas only days away, it’s hard to believe how much the markets are up and how quickly the year has flown by.
We are going to make this short and sweet: The ranges are going to get smaller and the volumes are going to drop over the next few weeks. Maybe during next week’s two-day Fed meeting we see a pickup, but with the DEC roll in full swing, it’s our guess most of the volume will come from the spreads.
After the roll there will be an even bigger withdrawal from trading as we enter the Christmas holiday and New Year’s.
Most of the big banks and hedge funds have already shut down for the year. What they do not want is a big selloff at year end. Do you know why? Because of their year-end bonuses, that’s why.
In Asia 11 out of 11 markets closed lower and Europe is trading modestly higher. Today’s economic calendar starts out with the MBA purchase applications, EIA petroleum status report, 10-yr note auction, Treasury budget and earnings from Costco (COST)
(Click to enlarge)
It’s hard to get excited about the markets right now; they are too high to buy and too firm to sell. It’s possible the selling we are seeing on the close every day continues right into the end of the year.
That said, the S&P acts tired. Based on the volumes it also doesn’t look like many people are trading. Our view is to sell the early rally and buy weakness. It is looking like the algos are targeting the sell stops under 1801.
As always, don’t forget the 10 handle rule and please use stops …
- In Asia, 11 of 11 markets closed lower: Shanghai Comp. -1.49%, Hang Seng -1.17%, Nikkei -0.62%
- In Europe 7 of 12 markets are trading higher: DAX +0.30%, FTSE +0.36%
- Morning headline: “Index futures rollover, algos dominate trading volume”
- Total volume: 1.16ESM and 11k SPZ traded
- Economic calendar: MBA purchase applications, EIA petroleum status report, 10-yr note auction, Treasury budget and earnings from Costco
- E-mini S&P (Sep)1803.50+0.50 - +0.03%
- Crude97.80-1.42 - -1.43%
- Shanghai Composite0.00N/A - N/A
- Hang Seng23338.24-405.949 - -1.71%
- Nikkei 22515515.06-96.25 - -0.62%
- DAX9139.10+24.659 - +0.27%
- FTSE 1006547.23+23.92 - +0.37%