Most of you already know this, but I didn't go to college. It was not that I did not want to, it was because my parents had 10 kids and not until the time the top five brothers and sisters went to college, dropped out and went back a few times did my parents figure out how much they had actually spent. With six girls and four boys, the next big hit came from paying for all the weddings. The poor guy took one whack after another. So I admit I didn't get the Notre Dame education my brother did, but I did gain some knowledge he never did. I learned some street smarts and how to read the boards.
They say for every good man there is a woman behind him, and I will be the first to admit that. But in my life there are two women, my wife, who I started going out with in high school 35 years ago, and the lady that runs our company, Suzanne Royals. They both can be very difficult to deal with but they know how I think. Maybe it is because I didn't go to college that I don't fully express myself, clue them in. When I start seeing something I don't always know how to connect the dots, but I do know that I notice things that most people don't. Rick Barnes, a famous desk trader known for his ability to follow 25 or 30 markets at once, and Marty “the Pit Bull” Schwartz would always ask me what I thought. It really wasn't what I thought but more what I was seeing, meaning the prices flashing at me from all the quote boards. I didn't understand the economic side of most of the releases or how they would affect the markets, but for some reason I would know when the S&P was short-term overbought or oversold. Rick was a huge bond and commodity trader and Marty was a wizard S&P 500 trader.
I never really learned to read charts until the last several years, so everything I depended on was what I heard, how I thought it fit and the price action of the boards. After years and years of working on the floor I developed pattern recognition. I know this may sound funny, but after 35 years of being on the floor and staring at the boards, they began to talk to me. I somehow come up with a direction, and it was usually the opposite of what Rick and Marty wanted to hear but it was how they gauged what was going on in the floor. Sure they wanted to know buyers and sellers, but they knew before they picked up the phone I was going to give them an honest feel for the direction of the markets. Even today when Marty is holding 30,000 or 40,000 options he depends on me for my feel. I have to admit it is not as easy reading the boards as it used to be. I had to develop new ways of looking at and thinking about the markets. I now understand that it's not just program trading that runs the S&P up and down but also how algorithmic trade searches for buy and sell stops and how a headline that used to move the S&P 4 or 5 handles makes it move 10 or 12 handles. This has helped me widen out my parameters. In today's high frequency trading world you can't just depend on just one or two trading tools, you need an arsenal.
I know being an old futures tape reader that the rules of the game have changed, but that doesn't stop me for getting up every day for the fight. I know that I can't fire away all day like I used to. Now patience and letting the market move before you jump in is the only way to do it. I love the market and always will but I also understand that it's not the game it used to be. Nowadays you have to “get in, get out and don't fall in love with your position.”
S&P CASH STUDY FOR THE JULY EXPIRATION FULL REPORT
Our view:
The trading range in the S&P is narrowing. This usually means the S&P is preparing to break out, but the question is can it continue to rally into the election or are we headed toward another rally / false start? Yesterday's report was all about looking for the Pit Bull's Thursday-Friday low the week before the expiration. The low came in at 1320.00 and right now the SPU is trading 1335.00. It's our feeling you have to buy weakness. As always, keep an eye on the 10-handle rule and please make sure you use stops.
For today:
- It's 6:00 a.m. and the ESU is up 7.5 handles at 1336.75, crude is up 79 cents at 86.87 and the EC is up 11 ticks at 1.2217.
- In Asia 8 of 11 markets closed higher. (Hang Seng +0.35%, Shanghai Comp +0.02%).
- In Europe 12 out of 12 markets are trading higher (CAC +0.66%, DAX +1.28%).
- The main headline this morning: “S&P Futures Higher After Moody's Downgrade of Italy.”
- Today's economic calendar: PPI, consumer sentiment and Atlanta Fed Pres. Dennis Lockhart speaks in Jackson, Miss.
- VOLUME: 1.9 mil ESU and 9.5k SPU traded
- SPREADS: 430 SPU/Z spreads traded
- FAIR VALUE: S&P +4.00, Nasdaq +9.00
Closing Print Video: http://www.mrtopstep.com/videos/?id=21528
Thursday's wrap-up from the S&P pit:
Cantor Fitz's Justin Lederer noted today's big event is $13Bln 30-year reopening, which always has “many uncertainties but today even more so than ever” after Wed “eye-opening 10-year auction, which stopped 4.3bps through with an enormous 45.4% awarded to direct bidders.” He believes “most will be extremely cautious in their setups (safe-haven bid at anytime) and their bidding at auction time nervous both of not to miss the auction (dealers only purchased 14% yesterday) but also of paying too much especially as we sit less than 10bps from the all-time low yield of 2.502% which traded in 2008 (we traded 2.508% on June 1).” He adds long end Tsys should maintain bid due to “global economic slowdown, crisis in Europe and “Operation Twist” with the Fed purchasing roughly 92% of the new issuance and offer-to-covers continuing to fall at the operations.”
Today's S&P 500 trade started with 340k ESU and 2.7k SPU traded on Globex, trading range 1339.50 – 1324.00 following Wednesday's range of 1340.00 – 1328.00, settling at 1336.30 up .8 handles. The RTH's opening range was 1327.50 – 1326.80, marking the early high before closing the gap from RTH's 6/29/12 at 1324.00, then 1321.70, followed by a pop to 1324.00 and back down to a series of new lows 1321.20, 1320.70 and 1320.00 by 9:50CT. EUBIE (9:46:16): Buying AUG $129 SPY CALLS / $5.45 SWING LEGG / 200 day EMA 1320 area. Also, over the first hour 183,072 contracts traded in SPX, 1.95x the recent hourly average, with 73,785 calls and 109,287 puts trading as the index traded near $1327.41 (-14.04). Front term atm implied vols were near 17.7% and the CBOE VIX was near 19.35 (1.40). During the midday the VIX backed off from 19.51 HOD as the equities caught a bid and short covering ran some weak buy stops. We write about the market tendency to make a low the Thursday or Friday the week before the expiration and now we shall see. As you can see below, there are some overseas economic releases and tomorrow we see some US bank 2nd qtr earnings reports. This data had some taking in profits while they could, which lead to the mid and late day strength and will lead us to the next leg. Going into the closing imbalance report, the spoos were making new daily highs at 1334.50. The closing imbalance showed 24 / 30 DJIA FOR SALE / mice nuts and the broader market showed $438M to sell. A late report cited, 11 Banks linked to the Libor scandal could be fined up to $22B by global regulators – financial press citing analyst speculation. 1329.00 traded on the cash close before settling at 1329.20, down 7.1 handles.
Tonight – China June eco #s (IP, fixed assets, retail sales) – Thurs night. China Q2 GDP. Published Thurs night. ECB publishes Jul monthly report. European industrial production for May (5amET) BOJ policy decision (will come early Thurs morning). Spanish regions' budget chiefs to meet Thurs
Fri Jul 13: earnings before the open (JPM, WBS, WFC)
MTS Chart: “ESU 1324 GAP FILLED & ESU 1320 TRENDLINE SUPPORT / TODAY'S LOW” http://wp.me/p1Rnj9-5AI
Please visit www.mrtopstep.com and take a look. There are webinars, market updates, news and more… Also, please click on the education tab http://www.mrtopstep.com/trading-101/ We believe there is very useful information on the MTS site – so take advantage and check it out while you start your free trial.
FREE trial http://www.mrtopstep.com/FREE/ and our offer of a FREE MONTH in the chat room with a quarterly signup is still good: http://www.mrtopstep.com/offera/
______________________________________________
CONTRIBUTORS' CORNER
SPX CHARTS
Roger Volz, BGC Partners
SP 500 Futures 60 & 15 Min Charts and Indicators…..defensive pattern in play below 1339.50-1340.00 sees am continuation filling into to the next ledge of grouped support found from the upside acceleration from 6/28 accelerator at 1323.00-1320.75. The previous downside break line at 1331.00 now begins to firm as resistance.
Resistance ledges: 1331.00-1334.00; 1339.50-1341.00; 1347.75; 1354.50-1356.50- 1357.25; 1359.00
Support ledges: 1320.75; 1317.50; 1310.25 ; 1303.50-1302.75
ST OB next > 1375.00 – 1377.50 lowered; ST OS < slow to react lowering to 1317.25 from 1323.50VST 15 min basis working a rebound off intraday double bottom at 1320.00, just missing VST OS with a lowered target at 1319.25; technical relief underway > 1326.50 sees resistance at 1330.25 / then 1331.50 for repair VST OB > 1340.50 lowered from 1351.50 // VST OS < 1319.25 just missing in AM session
_____________________________________________________
YOU WANT A LOOK AT WHAT OUR TRADERS SEE EVERY DAY? SIGN UP FOR THE IM TRIAL AT http://mrtopstep.com/free/ IT'S THE REAL DEAL!
_____________________________________________________
Sign up for our free mailing list at http://mrtopstep.com/ for full report.
Follow us on Twitter @MrTopStep http://twitter.com/mrtopstep
DISCLAIMER: The information and data in the following report(s) 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. MrTopStep, its officers, directors and its contributors may in the normal course of business, have position(s), which may or may not agree with the opinions expressed in this report.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
