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Looking to the Futures

S&P 500 Futures Rolling into Q4 Above 3,000

Key Points
  • 20% YTD Gains Elevate E-mini Near All-Time Highs

Just over ten years ago in March 2009 the S&P 500 was spiraling downward below 700. It took a few months before we regained 1,000 in August of that year. Five Augusts later 2,000 was breached and now it seems we’ve put 3,000 behind us as well.

Eyeing a new all-time high, the E-mini S&P 500 futures would need to eclipse July’s 3024.50 to break into record territory, and as of the morning of Friday the 13th, the feat seems well within reach.  

Some notorious investors claim to be sitting on relatively large sums of un-invested cash, generating virtually no real returns. With low rates, full employment and cash on the sidelines, traders will be rolling from the September futures contract to December over the next few sessions and preparing for an October, a notoriously unpredictable month for the market.    

E-mini S&P 500 Futures

E-mini S&P 500 futures currently have an initial margin requirement of $6,930, representing about 4.5% of the notional value. Day traders can open a contract with $3,465 initial margin. Each one-point move carries a $50 multiplier. Options are available with ample liquidity and volume including these expirations:

  • Monday
  • Wednesday
  • Friday
  • End-of-Month
  • Quarterly

Sizing up Volume

E-mini volume in August spiked amidst market volatility, rising 78% over August 2018 to 44.7 million contracts. Year to date through August volume has been 270.5 million, up about 1% over last year.

The CME’s total volume in August including all futures and futures options tallied 535.4 million contracts, up 46% over August 2018. Year to date total volume is up 5.5% at 3.18 billion contracts.   

Expanding to look at all U.S. derivatives volume, data shows 2018 produced an 18.8% volume increase to 10.56 billion contracts, fetching over 1/3 of the entire global share.

In 2018 global equity index derivative volume spiked nearly 33% to 9.98 billion contracts, according to the Futures Industry Association. Expanding the view to observe the entire universe of all global derivatives, volume rose 20% to 30.28 billion contracts, a new record high. The 20% growth was the best year over year number since 2010. Of the global total volume last year, futures trading was up 15.6% to 17.15 billion contracts and options volume grew 26.8% to 13.13 billion contracts.

Looking Ahead

In the short term, the market’s direction could be dependent on hints at short-term interest rates and the Federal Reserve’s rate decision and projections due this coming Wednesday. Trade with China is constantly in the headlines as the markets hope for progress sooner than later. Within a few weeks, we may know if the S&P at 3,000 is new support or still the resistance

Corporate earnings reports will be front and center as we move into October, and should be pivotal as the S&P 500 E-mini Futures test their recent gains with quarterly reports. But there are risks in the background including trade relations, the sluggish global economic framework, and the ever-present unknown risks.

E-mini S&P 500 Futures Technicals ESU19

The recent rally has momentum but studies are hinting at overbought conditions. The market appears cautiously optimistic with Wednesday’s close above the 1st swing resistance. Support and resistance is seen as follows: 

Resistance 2    3033.50

Resistance 2    3024.50 (also E-mini record high from July)

Pivot                3012.75

Support 1         3003.75

Support 2         2992.00

Contract Specifications

Trading Calendar

Retail Sales                                                     09/13/2019 8:30 a.m. ET

University of M. Sentiment                              09/13/2019 10:00 a.m. ET

FOMC Rate Decision                                      09/18/2019 2:00 p.m. ET

E-mini S&P 500 Futures ESU19 Expire          09/20/2019

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