This week has started as the slowest trade of the year and we anticipate more of the same. So, while the market remain quiet, we will keep these Opening Prints short and sweet.
After trading the slowest day of the year on Monday, the S&P 500 futures held a tight 4.5 handle range in Globex Tuesday, on only 125K volume. When the cash session opened the ESU6 found an early 2176.00 low before pushing higher throughout the morning, up to 2183.50, just above Monday’s Globex high. Again, buyers dried up above the 2180 price, and like Monday, price retraced back to the 2173.75, 9.75 handles from the cash high. The futures rallied into the close on a MOC $40 million to sell before settling at 2177.50, up 2.0 handles, on total volume of 1.17 million Sep mini’s.
Overall, it was more of the same for an index that is very slowly building higher highs and highers lows, and turning what was a price ceiling for a couple weeks above 2170 into a floor that is leading to higher prices.
Over the last few years whenever equity indexes have been making new all time highs we have seen more and more bears come out calling tops. Last week Goldman Sachs released a note to clients suggesting that it was time to sit on the sidelines with equities, and then yesterday on CNBC, Marc Faber called for a 50% correction of the S&P 500. Seems like every new high brings them out. Eventually these bears go into hibernation and refuse to talk about their past calls.
When the S&P bounced back from the 666 low in March 2009 and traded to the 1,000 level they were calling for a pullback. Then at 1,500 even more of them were calling for a pullback. Then at 1750, 2000 and 2100 they were still calling for a pullback. Last year when the S&P 500 corrected in August from a 2135 high down to 1830, and then to 1802 this year, many of them were touting their permanent bearishness for nearly 1,000 points and felt validated because of a 300 handle pullback. Their calls were years late and they were still in the hole.
Well, guess what, now the benchmark index is doing what few thought it could. When they said that it was bearish this market couldn’t make a new high for 12 months. When they said Brexit was the end of the bull market, the S&P showed the same resilience it has since March 2009 and ran the stops higher, now we are in grasp of the 2200 level.
I have seen bears trying to short new highs for the last three years, but it seems that there are more of them with this rally, and they are taking it personally. All the while the S&P keeps running those stops, and even though they have been short all year, when the S&P does hit resistance somewhere above 2200, they will be telling me how right they were.