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Commodities, Inc. Research Department. Please view our Risk Disclaimer. Free in-depth analysis of the S&P 500 futures market written by a professional S&P
S&P 500 Futures
Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.
Free in-depth analysis of the S&P 500 futures market written by a professional S&P 500 trader.
January 04, 2015
Financial Futures and Options Trader, Van Commodities, Inc.
At the end of 2013 the S&P 500 cash index closed at 1848.36 on December 30. Over 2014 the cash index rallied eleven percent and closed at 2058 December 31, 2014. The front month March E-Mini S&P futures contract (ESH15) at the Chicago Mercantile Exchange (CME) closed at 2052.50 on December 31, 2014.
ESH14 is overbought based on several short and intermediate term momentum studies. It would not be surprising to have a pullback over the near term, after the roughly six and half percent Santa Claus rally from December 16 to December 26 and the fifteen and half percent rally since October 15. The trend for ESH15 still appears to be up and with the US economy appearing to be in good shape, ESH15 may find good support not too far below.
Stock traders often look to Alcoa’s earnings as the kick off for the US corporate earnings season. The company will announce its fourth quarter (Q4) earnings on January 12, after the market close. Although many US corporations may have been hurt by the strengthening US dollar during the fourth quarter and analysts along with corporations have lowered their expectations for Q4 by 5.2 percent since September 30, 2014, according to Fact Set, ESH15 has held in well.
Much of the decrease in earnings expectations falls on the energy sector due to the dramatic price break in crude oil over the past several months, but the financial and industrial sectors have also seen reductions in expected earnings.
With ESH15 being technically overbought, uncertainty surrounding the upcoming earnings season and the ever important Non-Farm Payrolls data along with unemployment statistics on Friday 09 the market may see increased volatility with some further downside.
From a shorter term trading perspective initial resistance may come in at 2059.00-2065.00 with stronger resistance 2072.00-2079.00. Initial support may be found at 2010.00-2017.00 with stronger support at 1975.00-1980.00.
June 08, 2013
S & P Mini Futures Broker, Van Commodities, Inc.
Stock market investor’s fear that the Federal Reserve may alter their Quantitative Easing policy at the next Monetary Policy meeting (FOMC) June 18 and 19, seemed to fade away on Friday after the release of US economic data. Nonfarm payrolls, unemployment and wage data; overall, including revisions to the previous two months, were more or less within the range of market participant’s expectations. The data supports the idea that the US economy is improving, but at a labored pace possibly delaying any policy change by the Federal Reserve until the FOMC meeting in the middle of September.
The S&P e-mini future (ESM13) continued to rally Friday after the reversal day on Thursday. The price action on Thursday indicated the possibility that the pullback over the preceding two week period had gotten ahead of itself. ESM13 became oversold based on several short term momentum indicators during the approximately five percent pullback over the prior ten day period on an intraday basis. Over the near term initial support for ESM13 may come in at 1626.00-1632.00, with stronger support at 1615.00-1620.00. Initial resistance maybe found at 1645.00-1652.30, with stronger resistance 1664.00-1672.00.
April 07, 2013
S&P Futures Broker, Van Commodities, Inc.
US economic data reported last week were uniformly weaker than economists’ expectations which included the Institute of Supply Managers Indices (ISM), Unemployment Claims and Nonfarm Payroll data. The statistics are possibly indicating that the US economy may be at inflection point with further slowing, moving into the second and third quarters. The US stock market future (ESM13) sold off roughly two percent and scored a downside weekly reversal on charts. Throughout next week investors will have to deal with several issues including a number of speeches by members of the Federal Reserve, the minutes from the Federal Reserve’s Open Market (FOMC) previous meeting, the start to first quarter earnings, and several economic statistics during the week.
ESM13 displayed a loss of momentum on April 02 when the contract traded at its highest level since the financial meltdown of 2008. ESM13 had become overbought based on several short and intermediate term momentum indicators at its intraday high of 1568.00. ESM13 appears to have begun the long awaited correction many market participants have been expecting. If a correction has begun initial resistance may come in at 1550.00-1555.00, with further resistance at 1560.00. On a trading basis, over the near term, initial support may come in at 1525.00-1532.00, with the next trading support at 1511.00-1522.00. The possibility of a bigger term correction appears to be in place and ESM13 may need to trade towards 1480.00 before good support shows up.
January 01, 2013
Commodities Trader, Van Commodities, Inc.
Last week the US stock market; represented by the S&P e-mini future (ESH13), continued the risk on trade initiated New Year’s Eve, closing Friday at a contract high. In the closing moments of 2012; ESH13 traders gave Congress and the Administration the benefit of the doubt over whether the two parties could arrive at an agreement on the Fiscal Cliff matter. Although the US Government was only minimally successful; resolving only the issue of expiring Bush era tax cuts, stock market participants continued the rally started on December 31. Last week traders appeared to shift their focus from the political fight in Washington over the debt ceiling and sequester matter to other factors, but the fiscal issues will in all likelihood be revisited in the not to distant future.
Last week’s US economic statistics were of a second tier nature and not of any real significance for stock traders. The factors of interest for ESH13 traders appeared to center on stronger than expected Chinese trade data; signaling the potential of a rebounding Chinese economy and several US corporate earnings reports, which included Alcoa (AA) and Wells Fargo (WFC). AA earnings were roughly as forecasted and although revenue came in stronger than expected the stock closed down on the week. Wells Fargo’s earnings, reported on Friday, showed a slowing in mortgage applications and shrinking net interest margins. The stock closed down marginally on the day, but up slightly on the week. Of the twenty seven companies that released earnings during the week, roughly eighty percent beat analyst’s lowered expectations.
Next week the stock market will contend with a busier corporate earnings schedule. Some of the companies to report include JP Morgan (JPM), Goldman Sachs (GS), Bank of America (BA), Citigroup (C), General Electric (GE) and Intel (INTC).
US economic data to be released next week include; Retail Sales, PPI, CPI, Industrial Production and Capacity Utilization, FED Beige Book, Philadelphia FED Index, Housing Starts, Building Permits and Michigan Consumer Sentiment.
ESH13 is overbought based on several short term momentum studies. Intermediate term indicators are nearing an overbought condition, but still have further room on the upside. ESH13 is possibly moving toward significant resistance over the next couple of weeks. Over the near term support may come in at 1437-1446.00. Initial resistance may come in at 1474.00-1480.00 with stronger selling at 1486.00-1495.00.
December 2, 2012
E-Mini Futures Broker, Van Commodities, Inc.
The US stock market, basis the December E-Mini contract (ESZ12) will have to contend with several first tier economic releases throughout the coming week, as well as the continuing “Fiscal Cliff” negotiations between the Executive and Legislative branches of government. Most investors and traders assume that the data releases will be skewed somewhat by Hurricane Sandy next week. Any weakness may not create too much of a hiccup, as the Bernanke Put still appears to be in place. The question about the extent of the Bernanke Put may become somewhat clearer in the week of December 10, 2012.
The Federal Open Market Committee (FOMC) two day meeting starting the following week, December 11, 2012, will be followed closely by market participants. Investors will be searching for any hint, at the conclusion of the FOMC meeting, about how the termination of Operation Twist will be dealt with at the end of December. Traders will hope to find out whether the Federal Reserve (FED) will extend Operation Twist, announce a new form of Quantitative Easing (QE) or just let Operation Twist roll off. The third possibility seems doubtful in light of the FED’s aggressive monetary stance over the past several years and would be a big negative for ESZ12.
ESZ12 has traded strongly to the upside over the past ten trading sessions, after the roughly nine percent sell off over the preceding nine week period. ESZ12 became oversold during the multi week sell off based on several momentum studies, in both short and intermediate time frames. ESZ12 looks a bit extended on the upside and a pull back over the short term would not be a surprise. Initial resistance for ESZ12 may come in at 1415.00-1419.00 and then 1430.00-1436.00. Initial support should come in at 1389.00-1396.00 and firmer support may be found at 1375.00-1380.00.
November 18, 2012
S&P 500 Futures Trader, Van Commodities, Inc.
The US stock market, basis the E-Mini futures contract for December (ESZ12) has traded down roughly nine percent since hitting a high of 1468.00 on September 14, 2012 intraday. Although third quarter earnings have come in roughly around the marked down expectations of analyst’s, revenues have come in somewhat light.
Several concerns on investors and traders minds include; the potential for a global economic slowdown-and the effect that would have on future earnings and revenues, renewed geopolitical concerns in the Middle East and whether the US is going to avoid going over the Fiscal Cliff. The manner in which President Obama and the Congress agree to deal with closing the deficit and the longer term debt issue has potential implications for the treatment of Capital Gains and dividend taxes, going into the New Year and therefore a potential timing issue for investors.
The news coming out of President Obama’s meeting with Congressional leaders in the second half of Friday’s trading session seemed to pacify trader’s and investor’s concerns in the near term. Probably more important for traders is the deeply oversold levels of the market based on several short term momentum studies. Going into the Thanksgiving holiday shortened week, it would not be a surprise to get a rally over the next several days from short covering.
ESZ12 had a reversal day to the upside on Friday. A temporary low for the sell off over the last several weeks may have been put in on Friday’s action. If the lows are in for the near term, the market should find buyers around 1346.00-1350.00. If the lows were not put in Friday ESZ12 should find buyers at 1313.00-1333.00. In the near term initial resistance should be found 1372.00.00-1385.00 and further selling could appear 1394.00-1404.00
February 16, 2012
Commodities Broker, Van Commodities, Inc.
Although much of the data about the US economy over the last 9 market days has been positive, the S&P has really gone nowhere. The bulls think the market action is a consolidation before going higher and the bears see it as topping action and time for at least a correction, if not something bigger. The potential positive news out of Europe, as far as Greece is concerned, may already be priced into the market and it possibly leaves the trap door open for negative information.
The Federal Reserve minutes released today, February 15, 2011, from their FOMC meeting January 25/26, 2011 really gave the market no more information on the probability of any future QE3. The President of Dallas’s Federal Reserve Bank, Richard Fisher was quoted today as saying in a speech he gave at the Texas Manufacturers Summit 2012, “I will support no QE3, no additional mortgage-backed securities, no additional Treasuries." He continued, "Wall Street keeps dangling QE3 out there, I think it's a fantasy of Wall Street - it's not going to happen, it's not necessary."
Today’s action in the S&P futures, basis the March contract, may have given us the first read into a coming correction in the stock market. Many momentum studies have been in an overbought condition for several days and appear to be rolling over. The March futures made a new high in the move and reversed closing below the previous days close, a possible reversal signal, and below the 10 DMA. First minor support will come in around 1334.50 and 1318 with more significant support around 1296.
The S&P cash market made a new intraday high at 1355.87 and closed down on the day, below the 10 DMA. The outside day created by today’s action may result in a deeper correction in the stock market. Many momentum indicators have been in an overbought condition for several days and have rolled over. An important level of resistance for the S&P cash market, for many technical traders, which was not taken out is 1356.48-made July 07, 2011 the potential top of a wave 2 for Elliot Wave Counters. The next several days may be interesting for stock index traders and the investment community.