Last Four Sessions = Lowest Volume of the Year

Last Four Sessions = Lowest Volume of the Year
Last Four Sessions = Lowest Volume of the Year
Last Four Sessions = Lowest Volume of the Year Getty Images

Danny’s View

It's hard to be bearish with the major indexes posting their eighth day of gains in the past 11 sessions. Yesterday, stocks got a boost from strong corporate earnings results, which pushed the Dow Industrials back into positive territory for 2018. The Dow is now up 0.3% for the year, while the S&P 500 has gained 1.2% and the Nasdaq Composite is up 5.5% year to date.

The VIX, which had traded up to 50.20 in early February, traded down to 14.57 yesterday. This was a drop of almost 11.00 from its April 12th 25.43 high. This is a stark turnaround from two weeks ago when the ES was seeing 50 to 80 handle drops. I coined the phrase ‘I’m a bull but I ain't no fool.’ Still, tell me I am wrong, but these markets look and act like they want to go higher.

Also helping the S&P 500 futures ( ES) go higher was the drop in the price of the VIX, which settled at 15.25 yesterday after it had traded down to 14.57. Fear has dissipated considerably. The way we see it, the ES has been ‘trying’ to rally for the last two weeks, but it has been subjected to several negative news items that have stymied the rallies.  

With that out of the way, for now, the markets are getting a boost from the first quarter earnings. Traders are hoping that the earnings season, which is expected to be one of the best in years, will help steady a stock market that has stalled and stumbled over the past two months.

As I have said many times recently, a high level of buy stops has built up. It looks like the short squeeze is in full gear. According to Stock Trader’s Almanac, the April expiration has been up 14 of the last 21 occasions but is prone to weakness after the tax deadline.

Our view is short and sweet - we are looking for the ES is go higher as we try to remain patient and look to buy pullbacks. First 2720 and then 2748 to 2750 are all possibilities on tap.

Today’s economic calendar features three Fed speakers, but the markets are unlikely to move based on items on the schedule.

  • MBA Mortgage Applications 7:00 AM ET
  • William Dudley Speaks 8:30 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Beige Book 2:00 PM ET
  • William Dudley Speaks 3:15 PM ET
  • Randal Quarles Speaks 4:15 PM ET

 

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