This is Your Markets on QE3

Yesterday MrTopStep announced its relationship with the Trader’s Almanac, and today we want to introduce you to Nanex. While everyone was watching the S&P futures, gold had some big moves too. Just after the Fed announced its bond buying program and the S&P futures took off to the upside, so did gold. But before we jump into the gold, let’s talk about the S&Ps. Yesterday the S&P closed at multi-year highs, up another 1.6% and at the highest level since Dec. 31, 2007, while the Nasdaq closed at its highest level since 2000.  The VIX tumbled to 14.

Below is a screenshot of the depth of market for the Dec Gold contract on the Comex. The middle graph shows size of the depth of market, clearly showing how there was no size around the announcement, no one posted any orders and then after the announcement, a large flood of orders. The chart posted by Nanex also noticed at 12:15 ET there was a drop in price and size, I included a shot of that time period too.

From Nanex : 13-Sep-2012 Gold and Silver meet Bernanke
Trading was so furious in Gold, that the Futures market apparently tripped circuit breakers twice. First on the downside, then on the upside.

1. December Gold Futures (GC.Z12) ~ 1 second interval trades with depth of book color coded by how much size is at each level. Note the gap showing the halt after the drop. The depth of book shows orders continue to be added/removed from the book during the halt.

2. December Gold Futures (GC.Z12) ~ 1 second interval trades with depth of book color coded by how much size is at each level. Another gap, this time after the meteoric rally.

3. GLD ~ 2 second interval chart showing trades color coded by reporting exchange.

At MrTopStep we are constantly striving to bring you the very best and most up-to-date information. As we have said in the past and will say again in the future, we live in a new world trading order and traders need to keep up and acquire new tools to battle these markets and today should be no different. MrTopStep feels that the real-time data and analysis offered by Nanex (http://www.nanex.net)  is a great tool to add to our arsenal.

MrTopStep Closing Print Video: http://www.mrtopstep.com/2-6mil-esu-1-3mil-esz-33k-spu-and-38k-spz-trade/

Our view:
After a rally and a 7-handle selloff the S&P’s came  ripping back. It is and has been a “buy breaks” market. With the Fed out to buy $40bil of mortgage securities a month, the S&P has the potential to go a lot higher. I will admit I have been a bit hesitant that we would get some type of “sell the news,” but this is just too big. That said, we have several economic releases to get past this morning. The trend is your friend and the S&P continues to say that almost every day. As for today, we lean to selling the early rally and looking for a good spot to be a buyer. Now that the Fed has moved, it’s going to be all about … buying the dips and selling the rips. See you on the IM and as always, keep an eye on the 10-handle rule and please protect yourself with buy and sell stops.

• It’s 5:00 a.m. and the ESU is up 6.25 handles at 1463.50, crude is up 1.82 at 100.13 and the EC is trading 1.3063, up 77 ticks.
• In Asia 11 out of 11 markets closed sharply higher (Shanghai Comp +0.64%, Hang Seng +2.90%)
• In Europe 12 out of 12 markets are trading higher (CAC +1.68%, DAX +1.37%)
• Today’s headline: “World Stocks Jump on Fed Bond Buying Program.”
• Today: CPI, retail sales, industrial production, consumer sentiment, business inventories.
• VOLUME: 2.6mil ESU and 56k SPU traded
• SPREADS: 41k SPU/Z spreads traded
• FAIR VALUE:S&P +4.50, NASDAQ +13.00