Brian's Tuesday recap: China data looks iffy

What we're seeing in this China “rebound” is worrying. This renewed investment surge without export or domestic consumption engine is obviously tantamount to more overcapacity. Chinese press also reported that speculation is circulating that the recent surge in activities in and out of the bonded duty-free zones is largely encouraged by local governments cooking up their export figures ahead of the 18th party congress. The weak trade data yesterday likely revealed the true nature of the trade situation. Indeed, former China commerce official was quoted as saying that China's 2013 foreign trade outlook is not optimistic. Thus caution is the better part of valor when it comes to reacting to Chinese data. Source

Today's observations: Traders remarked that U.S. equity futures continue to trade in narrow ranges above fair value as attention shifts towards the two-day FOMC meeting. Investors across the globe shrugged off losses, though cautiously, amid political turmoil in Italy and in anticipation of the Greek bond buying results. Sentiment is boosted by hopes for fresh stimulus measures from the Fed.

Huge [SPX] cash spread trade just went up: the trade created 1.25bln to BUY in the mkt (responsible for the last leg higher) SPX bought 26300 Sept 1425 calls, bought 8737 Mar 1325 call, bought 8380 Mar 1400c, sold 26211 Mar 1450 calls, and sold 25140 Mar 1500 calls, paid $250mm – that is a lot of premium, posted mts2 (10:32:03).  

Just ahead of Boehner, SPY expires this week, 141 puts 60,000 were bought, posted mts2 (11:03:48). Following Boehner, McConnell stated the obvious, that time was ticking away, and White House press secretary Carney reiterated, Obama has put forward detailed spending cuts, while Boehner and McConnell say Obama has refused to be pinned down on any specific budget cuts. The stalemate brings to mind limiting all U.S. politicians to two terms. One in office and one in prison. Illinois already does this, and it seems to be working for them – sage advice from Curtis & Leroy.

Pivots: http://www.mrtopstep.com/?p=35933  and Webcast:  http://www.mrtopstep.com/?p=35936  posted premarket by Mike V aka @princetontrader  Mike also posted his vol windows at (08:51:06): ES: 1429.25 x 1419.25 and NQ: 2681.50 x 2655.75

MrTS premarket charts posted by Andy: “T” Charts 240m http://screencast.com/t/AejQY9Nh7  Daily http://screencast.com/t/YqV1z8LDiq

Inverse head and shoulders pattern [SPY] http://i625.photobucket.com/albums/tt340/SuzCharts/SPYBullishInvertedHampS.jpg posted by Suzie

MrTS Closing Print video for Tuesday: http://www.youtube.com/watch?feature=player_embedded&v=9XRonAtgO2o

Today's S&P futures (spoos) started with 222k ESZ and 600 SPZ traded on Globex, trading range was 1424.40-1415.40 / Monday's regular trading hours (RTH's), pit session trading range was 1421.00-1414.50 and settled at 1420.20 up 4.2  handles. Today, the RTH's gapped 3.5 handles higher at 1423.50-1423.00 marking the low before stepping higher, a series of higher highs and higher lows during the opening hour, printing 1430 to 1431 area touching  Mike V aka @princetontrade 1430-1435 target – my broken record every webcast for 2 weeks. After holding 1429.50 area the spoos popped up to 1433.00 following the huge [SPX] cash spread trade (posted above, today's observations) at 10:32. Leave it up to a politician to screw things up. As Boehner began his scheduled 11:00 press conference the spoos suffered the biggest pullback of the morning, trading down to 1428.50 area as mts2 posted, ahead of Boehner another, smaller SPY trade (posted above, today's observations). The bulls were there to provide the liquidity and powered the spoos back up to retest the highs. At 11:24CT 1432.50 area held on the rally and was followed by a sideways to slightly lower grind in light volume through the lunch hours.

As the day wore on, so did the S&P futures. After headlines with Republicans saying there was still no deal, the spoos got hit by several sell programs that took the index down to the high of the opening range at 1423.50. After a little sideways price action, the spoos rallied back up to the 1427.50 area. At 2:45 the closing imbalance showed 17 of the Dow 30 to buy and the broader market showed buying $225mil. On the 3:00 cash close the spoos traded 1427.60 and then got hit by a big buy program that came in after the close that pushed the SPZ all the way back up to 1432.00. On the 3:15 futures close the SPZ setted at 1431.50, up 11.3 handles on the day.

Like we have been saying, the S&P futures swing from buy stops to sell stops all day, every day.

Brian Shepard is a 20-year exchange member of the CME Group.

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CONTRIBUTORS' CORNER

SPX CHARTS

Roger Volz, BGC Partners

SP 500 60 Min Chart and Indicator….reverted to positive leaning on yesterday's retake of the 89-pd SMA at 1408 (noting held last test prior to NFP rip); breakout pattern above 1415 raises the trading range in this time frame with overhead resistance concentrations at 1422 (Bollinger) to 1424 (Dec 3 high 1423.90); then followed by 1427-1431.50. EU session in globex saw early selling against 1412.50 (which should cushion any early dip)
ST OB > 1431.50 from 1427 // ST OS < 1387.50 -1389.50

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