361 DAYS AND COUNTING
Bringing in the New Year means bringing in a whole new year of ups and downs. Right now the markets are “taking a breather” while all the power mechanics are on vacation. Yes, many of the robots get turned off too. It's really important to know that while the markets may want to go higher the rallies will remain suspect. Despite an ever worsening European banking crisis “Europe is on holiday” One has to wonder when they are actually going to start to clean this mess up instead on constantly kicking the can down the road. Until then we always must be on guard for the dreaded “false starts” Our New Year's resolution this year is to not fall in love with any one direction. The facts are the facts and we are still in a BEAR market. That doesn't mean the SPH can't go higher in the short term but there will be more failed rallies. With so much time in the year there is only one sure thing; the markets being all over the place. What we learned in 2011 is that if you stick your neck out when the S&P drops 15% to 20% you'll get paid. We also learned that if you liked the S&P above 1260 you got whacked. Maybe the beginning of the year will be different..
It's 5:30 am and the SPH is down 1.5 handles at 1270.50, crude is down .51 cents at 102.45, gold is up $3.00s and the EC is trading 130.15 , down 50. Today's economic calendar starts with the motor vehicle sales number and the MBA purchase application at 6:00 am, the Challenger Job-cut report at 6:30, REDbook at 7:55 and factory orders at 9:00. In Asia 6 out of 10 markets closed higher. In Europe 11out of 13 markets are trading lower. The main headline this morning “Stock Futures Mixed after New Year's Rally” We said yesterday that it may take a few days / week to get the volumes going again.
Our view? We think there is more money around to buy stock but we also know we are sitting at a big resistance level that has failed several times. We want to get to the floor and get past the open before jumping in. See you on the IM.
As always use stops and keep an eye on the 10 handle rule.
VOLUME 1.56mil ESH and 21k SPH traded
SPREADS: 28 SPH/M and 21 SPU/Z spreads traded
FV: S&P -1.60, NASDAQ -2.10
A lot of $weat and tear$ were spent chasing the markets up and down in 2011 but the final nail in the coffin was what MF Global pulled. It only added insult to misery…
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1st TRADING DAY OF 2012; DJIA + 1.7% / S/P +25 A LATE XMAS GIFT & JANUARY EFFECT
Investors were willing to put the risk back on to start 2012. Global equities were sharply higher during the Asian and European sessions as Global economic data flickers signs of life even as the credit crisis lingers for some time to come. The Middle East remains a hotbed as Iran warns the US Navy to stay away from the Persian Gulf and crude was up over $3. Bonds were down well over a point as traders looked for better opportunities.
Tuesday's trade started with 183k ESH and 1k SPH traded on Globex, trading range 1270.75 – 1280.00. The RTH's 20 handle gap higher opening range was 1274.50 to 1273.50 and served as the early low. Helping things along were the 9:00 economic reports, the better than expected construction spending and ISM numbers. At 9:15CT the SPH made a new high at 1279.30, up 26.7 handles and up over 2%. After a small pullback the SPH popped back up and made a new high at 1279.80 falling just short of the Globex high. At 10:46 the SPH was trading 1276.000 and drifted lower to retest the opening range by 11:30. At 11:41 the SPH made a new low at 1271.70. The volume may have picked up a little, but the overall trade is just as slow as it was last week.
After a small up tick the SPH sold off again and made a new low at 1270.30 rallied up to the opening range as the FOMC minutes were released and then on to 1276 by 1:38CT. *FOMC Minutes: Conditions Could Warrant Additional Accommodation *Unemployment Seen Declining Gradually /// sounds like more QE, does the Fed have a choice? The desk did an IM saying when the ESH was trading 1271 that it thought the ESH was at or near a low and to look for a bounce back to 1275.00 to 1276.00 and the SPH rallied up to 1276.50. The next move was back down to 1173-72 area. The cash imbalance showed $1Bil to the buy side and the futures sold off to retest the LOD and trading 1270.50 on the cash close before settling at 1272.10 up 19.5 handles on the day; In the end the imbalance was well advertised the last hour of trade & considering OIL up +4% we'll take all we can get!
EUBIENOMICS: “Add back the -7 handles from the MCH/DEC roll / today's HIGH of 1280 ya got the OCT month end test of that 1288.30's…”
Yesterday's MrTopStep's Video no video shot yesterday.
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ECONOMIC CALENDAR: http://mrtopstep.com/economic-calendar
CONTRIBUTORS' CORNER
SPX CHARTS ~~ Roger Volz, BGC
SP 500 Futures early AM session: If it's a opening price gap to the upside it must be a new year. Price gap on open on the back of positive India and China PMIs with upside continuation following positive US data construction spending / ISM beat. Post data push nudges above the Globex high at 1279.00. Early session lows were held after several tests at 1270.90 will act as the first short term momentum loss line. The October intraday and closing highs from 1288.70 – 1282.60 present price resistance against chart resistance grouping at 1284.10-1285.30
Seasonals: coming into the end of Santa seasonals which is last 5 / first 2 ….. represents 1254.00 SPX open on Dec. 23 morphs into January First Five and January Barometer indicators
SP 500 Futures VST 5 Min Model……note the stair step down series of VST OS into Friday at 1255 / 1253.25 ending with 1251.25 as a closing VST OS signal from 2011. The opening gap immediately found VST OB > 1275.00…..correcting on the dip to 1270.90 with a second attempt post data. Our next VST OB > 1280.50 ; VST OS is next targeted < 1267.50.
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