Trading the E-Mini S&P 500 in December

December 3, 2013 06:29 AM
Market Pulse for Dec. 3

This past Thanksgiving trading week, the December 2013 E-mini S&P 500 (CME:ESZ13) opened at 1802 and closed at 1804. We could be seeing an early month correction along with end of the year profit-taking. As I am sure many of you know, December is the second best month for equity returns averaging an estimated 1.5% as reported by Bloomberg. Just going back to 2000 you will find in December we saw 11 times where the S&P closed higher than its open in the month. The two years we did not see this happen were December 2002 and December 2007. So if history repeats itself we should see the S&P close higher than its monthly open of 1806.25. If we see Bloomberg’s average return realized, the S&P will close above 1830.

On the weekly chart we can clearly see big money posturing for a drop in the S&P. Dealer Intermediary has dropped net shorts from early November when they were net short -646,103 contracts. Last week we saw a net short position of -601,093 contracts. Leveraged Funds have been dropping net shorts now net short -131,517 contracts and Asset Managers are dropping net longs now at 786,250 contracts.

If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.

Proceed to Page 3 for this week's detailed fundamentals...


Mostly doji candles all week reflecting uncertainty and weak price action above 1800. ADX, which was reflecting a strong uptrend, just started dropping showing a possible weakening trend. Confirmation of weakening is DI Differential now below 5. Stochastics have turned down and look to be headed out of overbought territory. Technically it does look like a correction is coming and let’s not forget the last Fed meeting of 2013 will be held on Dec. 17-18.

With the posturing of big money at this time we just may see a December like 2002 and 2007 and keep an eye on DI- crossing up over DI+. This will help with knowing where the S&P will head toward the end of the month and year. Have a prosperous trading week.  

Have a prosperous trading week.

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