Tag Archives: S&P 500 Futures (ES)

S&P 500 Futures

France perd AAA

OK so now we know what we’ve known for a while and the markets are reacting. I’m watching 3 charts: The VIX, ES_F or the S&P, and the EURUSD for a little consolidation.

If you look at the VIX which has just passed 22.

and then the $SPY which is bouncing off 128 (I’ve left my levels)

and finally the $EUR.USD

The divergence between the $EUR.USD and the $SPY is relatively surprising. There’s been a lot written lately about the decoupling (since mid December) of the US economy and the economies of Europe, though after the employment numbers and retail sales numbers released yesterday, market participants are starting to show some doubt. And now a French downgrade… Hmm. After the dust settles on the downgrade we might get back to fooling ourselves that Europe’s problems won’t effect the US, but don’t hold your breath for too long, eventually these two charts will start to find a stronger correlation.

The lower Euro will eventually boost export data in Europe, and put pressure on that same data in the US. As a side note, and in principal your BMW or Mercedes should cost you 15% less today than in did 2 months ago. Does it? I’d like to say the same is true for Renault, but that’s another story.

I’m expecting a consolidation in the $SPY around 128.50 and will be selling a bit of this volatility.

Good Trading.


Unlimited Reading Yet No Choice

Over the last two days of mud wrestling, I’ve come to the conclusion that finding a good read is nearly impossible at the moment.

First the mud wrestling: and the winner is… One huge middle-aged divergence between the $ES_F and “Europe”. He’s been the diverging champion since mid-December and has me wondering. Who’s leading who? It’s just a question of time before this wayward couple converge again – I’d like to figure out that trade…

Now for the reading problems: There’s an elf in a cave, high up in the mountains pumping out 10-20 stories a day, sending the same stories out onto the wires, over and over. Except (of course) in Caucus Country, and for those 100,000 voters in Iowa who’ve managed to co-op the news for the last 2 weeks, I applaud you. You’ve brought new meaning to the word disproportionate. But please, enough. Snazzy busses, money, 8 votes, 999, take downs, endorsements. Enough, please? The slim pickins have been obvious forever, can we move on now?

The elf in question is tired of writing the same crap over and over, and wants all of you real journalists to look for something mildly interesting to write about.

Ugly AM for Short Leaners

That includes me!

It was a 1, 2, 3 punch of good news this morning.

  1. China lowering bank reserve requirements.
  2. Central Banks lower dollar swap rates hoping to bolster liquidity.
  3. ADP employment: comes in at 206,000 vs. 103,000 expected.

You don’t see this parabolic action often, with $ES_F futures up over 3% before the open, and the CAC40 up over 4%. For those that like Fibonacci, we’ve taken out 61/50/38% over the last 3 hours. Not bad if you were long at the close yesterday.

S&P 500 Futures

The ominous headlines this morning:

  1. 2 Million public workers strike in the UK
  2. UK embassy evacuated in Tehran
  3. UK expels Iranian Diplomats (France, Germany and Norway recall their diplomats for consultation) Hmm…
  4. Syria towards civil war

Bouncing S&P

CSII’m disoriented.

A 5.2% bounce in the CAC40 and a 3.0% bounce in the SPY ? It looks like the IMF-Italy rumors from Europe and the Black Friday sales numbers (fabricated numbers) sent a wave of euphoria through the markets this morning. Again, nothing has changed. Rumors might have some truth to them, but european sovereigns are still a huge mess and contagion management is still absent. It’s been 2 years.

Is this an opportunity to short the EUR.USD? It’s up only about 0.5%. Doesn’t that seem a bit weak given a 5% rise in Paris and 3% rise in the $SPY? It does to me.

My ratio spread idea that I proposed last week is performing well. I added a 120/112 bear spread now that 115 has appeared as a potential resistance point if the market decides to head south. Unfortunately, I continue to get burned with my ES trades, I’m not working with the right time-frames (for me). I know that and have made this error more than once. I’m writing that here for one reason, so I don’t forget, again.

I hate reading negative headlines day after day without an alternative point of view. We’re fed politically motivated rumors attempting to reassure, though these attempts fail miserably because they’re UNBELIEVABLE, think ‘super committee’. We’re fed ‘viral’ Black Friday sensational pepper spray fights and occupy protests – which sadly are MORE BELIEVABLE. You really don’t have to wait for consumer confidence numbers to understand the mood on the street.

On French television last night, by pure coincidence I watched a pepper spray-human combustion-aluminium lady rerun of The Experts (CSI). It wasn’t agency issue water based pepper spray, but butane. Ah! The person that selects these reruns must have a sense of humor, if only Grissom had a financial column…

117/112 SPY Trade Idea

I’ve been looking for some good trade ideas in SPY options, keeping in mind:

  1. The market is NOT oversold – RSI is holding up but heading south.
  2. The market is NOT panicking – VIX is not lurching skywards (though it’s relatively high at 31).
  3. The $SPY chart shows major range resistance between 110 and 128 – we’re sitting at 118 before the open, and futures are showing weakness. $ES_F

This is a tough spot to trade because we’re sitting in the middle of a perceived range and headline risk is very high. This morning might bring some good news (or not) to the table with claims and durable orders being released before the open.

My interpretation is that any good news might bring some short covering and a small bounce, and that the expectations for bad news are being baked in, slowly day after day so even bad numbers won’t send the market into panic. The market is trending downward in an orderly fashion with the current headline focus on Europe.

This is the 6 month $SPY chart:

S&P 500 ETF

Notice also that during August and September we held a 112 – 120 secondary range for almost 8 weeks. This might be a sign that the $SPY will again hold this range as support if the $SPY continues it’s current trend.

I’m looking at the following December ratio spread  for a small credit.

Buy 1x 117 puts and sell 2x 112 puts


Missed Trade

Suffering from a lack of inspiration and a little voice in my head which says: “Don’t trade today, don’t trade today, Monday’s aren’t good for you…”

So I’m analyzing the short $ES_F trade I didn’t make but thought about making. Here it is, I’ve circled it. My targets were well placed, and I still ignored it. “Don’t trade today, don’t trade today…”

S&P Futures

The headline effects were limited with nothing on the calendar in the US. Only fear and loathing here in Europe, so the set up was perfect.

Here’s a quote I like from ZH this afternoon. (You can find the full piece here.)

For the moment we appear to be in limbo, where stocks and other risk assets will rally no matter what?  The view seems to be that if European sovereign debt improves, then risk will do well.  There is little fear right now, as the assumption is that if sovereign debt does poorly, Germany will relent and the ECB will officially begin printing money (we say officially, because it is getting harder and harder to believe they are truly “sterilizing” their purchase in a true market neutral fashion). So that seems to be the idea out there, be long risk because if Europe improves, you will win, and if Europe gets worse, it will print, and you will win.  That just doesn’t make sense to us, as we think Germany is further from capitulating on printing than the market seems to have priced in.

Gold Futures & the S&P

I can’t get over the rise in Gold Futures today $GC_F, while the S&P Futures $ES_F wallow around, teasing me.

Gold Futures vs S&P Futures

What’s going on here?  If you look at the pre-market action on $GC_F it’s even more obvious how nice it would have been to be a buyer this morning. It’ll hit 1800 before anything slightly interesting happens. I’ve missed a very good trade…

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