RJO FuturesCast

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Stocks in Focus

Posted 12/18/2017 10:46AM CT | Greg Perlin

As we start the day, the S&P E-mini is making new contract highs, just off their high overnight at 2698 currently trading at 2695.   The Dow and Nasdaq are also very strong and both are at all-time highs as well.   The main driver of this monster rally for the bull camp is continued belief that tax reform will be passed very soon.   What makes this rally interesting is that investors have bought into this belief for over a year now ever since Trump was elected last November.   This should be of no surprise, but this bull market has been going on since Trump was elected so in other words this has been built into the market for a very long time.   So where do we go from here?   That’s the million dollar question, but my best hypothesis is simply the old phrase in the trading world, “buy the rumor, sell the fact.”  What I mean by that is investors buy into the rumor that tax reform will pass and when it actually happens, there should be no more speculation on reform because it’s already out, so investors “sell the fact.”   We will continue to watch for any developments and I urge all traders to keep an eye on the tape for anything that comes out of Washington.  

A logical level where I would expect the March E-mini to head is the psychological level of 2700.   We didn’t rally this hard to not hit that level so I would expect that level to hit soon and will probably have a pause and digest some of these big gains that we have seen in the last month.  The market is currently overbought but as most traders know that means little when you see a massive rally as we have all witnessed.  Another event that could shake the market is the anniversary of the death of Kim Jong Un’s father which happened on Dec 17 or Dec 18 I believe a few years back.   Kim Jong Un has a history of conducting missile tests on dates that have special meaning to North Korea so traders so be cognizant of any news out of the rouge country.   Technically, I see some resistance at the 2700 handle in the March contract in the S&P and support near 2652.  If you would like more technical levels that I am looking at and are looking to open an account, please contact me at Gperlin@rjofutures.com or you can reach me at 800-826-2270. 

E-mini S&P 500 Mar ’18 Daily Chart

E-mini_S&P_Mar18_Daily_Chart

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Greg Perlin

Senior Market Strategist
Greg is a former Chicago Board of Trade member. He was an independent floor trader, pit broker and floor broker with Cantor Fitzgerald. Some of his clients included traders from Morgan Stanley and Lehman Brothers. He also acted in the capacity of desk manager for the morning trade desk. Greg was part of the elite Lind Plus Division for 10 years before joining RJO Futures in 2011.
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