With two trading days left in April it may not have felt like a good month, but when you look back it actually was. On the first trading day of April the SPM settled at 1555.90, rallied up to the new contract highs at 1593-1594, sold off back down to 1531, taking out the old 1533 low, and popped back up to 1588 last week, leaving the S&P only five to six handles off its contract high and only 12 handles off S&P 1600.
Markets end mixed
The S&P and the NASDAQ futures snapped a five-day winning streak on Friday, the Department of Commerce numbers came in lower than expected -- 2.5% vs. the 3% forecast -- and a drop in consumer sentiment in April to 76.4 from 78.6 in March helped add to the weakness. Despite the selloff and the late short covering rally, there was just not enough gas left in the tank to push the futures back up on the close.
Before earnings started, most analysts predicted a terrible earning season but that's not how it's gone up to this point. With 50% of the S&P 500 companies already reporting results, 69% of those firms have beat expectations and 20% have missed, according to Thomson Reuters. Additionally, if the other 50% of the companies report in line, S&P earnings will be up 3.8% from last year's first quarter.
The start of 2013 has been an amazing run for the U.S. major indexes. Last week the Dow settled at 14,712, up +1.13% on the week and up +12.27% YTD. The S&P 500 cash settled at 1582.24, up +1.74% on the week and up +10.94% YTD. The Nasdaq settled at 3279, up +2.28% on the week and up +8.60% YTD. The Russell 2000 settled at 935, up +2.49% for the week and up +10.11% YTD. And the CBOE's VIX settled at 13.61%, down -9.08% on the week and down -24.50% YTD.
Takes a licking and keeps on ticking
If you're wondering why we put up the net changes, there are a lot of reasons, but the main one is how resilient the S&P has been this year. Sure the S&P futures have had some pullbacks, but none as large as the most recent one. We have never seen a rally like the current one. The S&P has not gone go up like it has since the weeks leading up to the 1987 crash. We are well beyond that, but if you look at the overall market (not just during the latest selloff), the S&P futures are still back and filling. No one knows exactly when the S&P is going to trade the big figure at 1600, but rest assured it's not long off.
As a whole, Mondays have not had a winning record this year (14 Mondays: 6 up / 7 down / 1 unched ave. gain +6.4 handles ave. loss -13.7 handles) Tuesdays have been the best performing day of the week ( 16 Tuesdays: 13 up / 3 down ave. gain +10.24 handles ave. loss -3.9 handles). Our view is to sell the early rally and buy the pullback. The S&P is loaded with buy stops from 1588.70 up to 1596 and again above 1599 up to 1603-1604. Additionally, Wednesday, the first trading day of May, has the Dow up 12 of the last 15 occasions.
As always, use stops and keep an eye on the 10-handle rule. Don't forget to catch MrTopStep on The Closing Print video found under the OptionsTV page (top bar). We report directly from the SPX pits, wrapping up the day and positioning for trade tomorrow.
OptionsProfits can be followed on Twitter at twitter.com/OptionsProfits
MrTopStep can be followed on Twitter at twitter.com/MrTopStep
For LIVE futures chat, more information on the 10-handle rule and futures educational content CLICK HERE FOR A SEVEN-DAY FREE TRIAL.
EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV