By: Danny Riley
I could write something on the two-day Fed meeting and all the net changes and how the S&P had its worst day in … blah, blah, blah. While I may write about that from time to time, that is not what you’re here for, and it’s not why I’m doing it.
For me, it’s all about supplying you with a “feeling” for what’s going on. Is it always going to be correct? No, but like I always say, show me someone who calls it right every day, and I would have to ask “Why is he not worth billions? Why would he want to tell us in the first place?”
What I can say is that the MrTopStep Trading Room rose to the occasion yesterday with all our traders making not one or two winning trades but several. One of the traders, Roger S, asked me what I thought after the open and I said, “ I wanted to sell the rallies but the first part of the day the S&P was stuck in a 3-handle chop. Then the Fed started talking and down the S&P went.”
I don’t do this very often, but I am today. The MrTopStep trading room is packed with great people and great traders! In our room you will find: Frank Ochoa the “Pivot Boss,” Kathy Garber from Structural Trading aka “Giggles” and Jack Broz from Broz on Bonds aka “the Work Horse,” and our latest longer-term trading weapon, Stewart Solaka from ChicagoStockTrading.com.
That’s the main trading group, but several folks like WB, Chance Strout, DC and Jimmy Mayo and so many others all show their trades live … all day long. Most importantly, they are in the room helping people understand what helps them make money.
It has been a life-changing event for me, leaving the floor. The boards that I used to read are gone, the noise of the floor and all the orders I used to see are no more. I can still go to work at the desk if they need me, but after 36 years of spitting, pushing, swearing and fighting, I decided to try and learn the things that other retail traders use to trade. I can honestly say the transition was not easy, but with the help of the room and all its traders I have now picked up on how they do it. Was it easy? No. Is the learning curve over? No, it never is.
On April 18th, MrTopStep is throwing another IM Pro Boot Camp. This gives the public an opportunity to get a full week of our trading room live and for only $19.00. Please sign up now as we have only room for 100 people and 40 have already been taken. Be part of the flow… join now!
The Asian majors closed sharply lower and Europe isn’t doing so well either with 10 of 11 markets trading lower. The DAX is off -0.92% and FTSE down -0.99%. On today’s economic calendar are the jobless claims number, Philadelphia Fed Survey, existing home sales, leading indicators, EIA natural gas report, 10-year TIPS auction, Fed balance sheet and money supply.
Our View
Volatility is back—in spurts, that is. In the MrTopStep Trading Room I warned that on the day of a decision the S&P generally trades in a low volume, narrow range until the Fed announcement and that is exactly what happened.
I also said the news algos would catch the headlines first and they did. As soon as the Yellen headlines hit the tape, the algos started targeting the downside sell stops in something I call “rolling sell programs.” That’s when the algos elect the sell stops so fast that you get multiple back-to-back sell programs. Yesterday I counted over 12 in a row. It never used to be like that, but once the algoball gets rolling there is no stopping it.
Yellen rocked the world when she said the pace of raising rates may come sooner than expected. When you combine that message with the ongoing taper, it is not surprising at all that the S&P would sell off like it did. This morning the futures are down and are working lower as I write this.
What we know is, it’s almost impossible to sell a lower open so that leaves us with… buying the early weakness and then selling the rallies. This goes against the February options stats that show the S&P has been up 22 / down 7 of the last 29 occasions.
As always, keep an eye on the 10-handle rule, and please use stops when trading futures and options.
- In Asia, 9 of 11 markets closed lower: Shanghai Comp. -1.40%, Hang Seng -1.79%, Nikkei -1.65%%
- In Europe out 10 of 11 markets are trading lower: DAX -0.92%, FTSE -0.99%
- Morning headline: “S&P futures seen lower; Markel, EU will impose sanctions if needed”
- S&P Fair Value: 1853.07 (futures 4.07 lower at 1849.00 as of 7:07AM CT)
- Total volume: 2.00 mil ESM and 26K SPM (another 29K ES March)
- Economic calendar: Jobless claims number, Philadelphia Fed Survey, existing home sales, leading indicators, EIA natural gas report, 10-year TIPS auction, Fed balance sheet and money supply
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