Market Review
From the Desk of Wyckoff Trader
Those of you that remember the fateful day September 11, 2001, may also remember how quickly the video footage was pulled never to be shown again…
Their reasoning was the Nation needed to heal and it was offensive to some folks living in the country of a certain nationality. And you’ll never see it again on National TV.
In looking at the below picture of school children suffocated with the graphic of the familiar virus, it disturbs me. What type of graphic artist would cover school children with spores of viruses? It violates everything human about it! If we are to heal this nation, we have to get rid of the graphic of the virus! They won’t! If Biden wins it will disappear. If Trump wins, it’ll be here to stay…until the cure?
Yesterday, the POTUS’ private tax records were allowed by the Highest Court in the land to be unlocked for the November elections. I say really? What’s that got to do with anything in July? In the PROS and THE NUMBAHS yesterday (Thursday, July-9, 2020) I stated;
“We are in a war, it’s a war of social memes. Make no mistake, China is winning this one for now. Fed is keeping zombie companies alive for now and you can profit too. China is gunning to take away the PEG from the US dollar. Trump has a battle on both fronts foreign and domestic.”
What did the market do just after the Supreme Court decision at the 10:30 marker? It sold off with a vengeance! Down to 3105 handle. It dropped the Emini nearly 70 points…
The market has been discounting the virus since March 24 and has not looked back. Dow futures lost five days of gains from July-1. Emini lost three days RTE (real-time) of gains finding support on the three-day weekend low on July-3. FANGS just keeps going higher pushing NASDAQ. And all those corporate headquarters are within miles of each other or at least in one county or state?
By my eye, I see this country divided not by politics but by technology. The new capital might as well be Seattle. Even Buffet said he did not violate his rules of diversification. It’s just he sees owning an enormous amount of shares of AAPL not as an investment but as owning a business? Don’t believe the hype player, “Mr. College Drop Out” has switched hats
I’ve been looking at the “Heat Map” for the last ten years. When I first started using it, it was not a Java app, it was a static png file. Look above at those big green squares (FANG) Stocks. Before, they were just little squares and the little red squares at the bottom were big. I’d compare yesterday’s to a previous one from years ago, however, the other one is on another hard drive in another state.
There is a major disparity between the CASH/EMIN, DOW, and the NASDAQ.
I see it every day on my charts. Warren Buffett loaded up the wagon on AAPL, TESLA is at $1,394.28 a share and Ford traded at $5.84 a share. Not my words but from a good trader friend of mine. I mean really, how did we let this get so out of proportion?
Sure it’s market share. I get it. It’s also simple math. Each square can only occupy so much space. And to get bigger, others have to get smaller….due to the constraint of the physical dimensions of three-d space-time.
This virus has crippled America as small mom and pop shops were not allowed to open whilst the big box enterprises were allowed to steal market share. It’s the truest survival of the fittest in this no contact sport we call the new norm everyday reality.
My state, Colorado, is bandied about whether to make the mask a legal requirement. It’s like the camel’s nose in the tent. Once you do that, there is nothing stopping them from forcing the vaccine on citizens whether it’s proven or not.
In the AM TURN, I wrote a piece called #YourP&LMatters where I try to put into perspective the events of last month and the forces pushing against Trump.
Here’s just a snippet:
And now, they are pushing Trump to decree all U.S. AMERICAN citizens to wear a MASK whilst out in public. If he gives way, the next step is to force all citizens to be vaccinated without their permission. Once the camel gets its nose in the tent…it won’t stop?
I go on to outline the next twenty to forty years of a potential reality providing we stay on the same path/trajectory.
Looking Forward Friday, July 10, 2020
What’s the market to do? On one hand, the ALGO’s showed what they could do yesterday when push comes to shove and the threat of a Biden win could upset crippled America. Overnight, Globex has tested the 15:20 marker at the 3153 handle with a 3154 handle. WB would have called that a “Wet Beak”, google “Go get your shine box” to understand the reference. Price traded down to 3111 handle at the 2:55 marker.
By my eye, I see selling. I’ve been talking about it for a week in the AM TURN. The problem is, you really can’t get short of the market, cause overnight Globex will rip your face off lifting the offers on little to no volume.
Today is the end of the cycle and the end of the week. We sold off hard down to the 11:00 marker and then for all practical purposes put in a resting spell. Asian markets fall after Wall Street retreats on economic worries is printing or soon will print on Bloomberg Terminals as the opening bell rings.
The question on most trader’s minds is, who wants to go home long on a Friday? We got Book Square and Scare da bull. Time will tell. Earnings season kicks off next week with the Banks. Wells Fargo is slated to disappoint. The volume yesterday was 1,640,708 lots.
This could signal a potential selling climax or worst potential preliminary support. Perhaps just a resting spell in an Australian market where one bloke is just waiting for the price to get down to his/hers/their bid…
We had a good week this week. Our subscribers have been very lucky with the levels given: 25 points Monday, 45 points Tuesday, 27 points Wednesday, and 13 points Thursday. Total for the week 110 points, that would be $5,500 on 1 lot and $16,500 on 3 lots.
That’s due to the volatility that crept back into the market. I’ll be the first to say, it does NOT happen every week. When it does it’s a beautiful thing! I would love for you to join us. If have not taken the time, now would be a great time to subscribe.
Economic Calendar
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MiM
Sell-side surprise on another anemic MiM. The 15:15 candle set the top and started a 20-minute selling spree for 20 points, rallied into the reveal only to go really flat into the close. Sometimes the MOC does not matter. That was the case yesterday.
Questions? Please email me: Marlin@mrtopstep.com
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Covid-19
We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quick as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).
A re-visit to the previous hot-spot New York. Florida and New York population is basically equivalent 21M vs. 19M give or take that is a 10% difference so close enough for this dataset for apples to apples comparision on some numbers.
New York hit its daily case peak of around 9,500 cases on April 10. Four days later on April 14th, New York’s death peak reached 764 daily deaths. Currently, Florida is at around 9,200 daily cases a day on the 7-day average and is losing 56 patients a day. Clearly something is different: virus, population, testing? I am not sure we know but we keep watching the Florida experiment with anxious eyes as they are now the canary in the mine.
As Florida goes either the other states will follow or not. How is New York doing now?
It is hard to see today’s New York data in the shadow of the April peak, but our charts are zoomable by simply holding the mouse down at the start date to end date. Doing this zoom we can see June’s data in detail.
New York continues to look great as far a heading in the correct direction but there is a worrisome slight up-tick to watch since the beginning of July. This was caught by our scanners yesterday.
That same uptick can be seen in the 7-day average for New York deaths. Worth watching.
To watch today: numbers greater than the following will be the wrong direction for recovery, less than the right direction.
| State | Cases | Deaths |
| Florida | 9488 | 67 |
| New York | 918 | 8 |
To use our table go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the stat.
Wear your mask!
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3184.00 | Opening Print: 3167.25 |
| Low: 3170.75 | High 3170.00 |
| Volume: 245K | Low: 3105.25 |
| ES Settlement 3140.75, Down 0.77 | |
| Total Volume 1.86 Million |
S&P 500 RECAP
7/9/2020
BUY TECH / SELL S&P
The ES traded 3169 on yesterday’s 8:30 CT futures open, traded up 1 handle to 3170.00, sold off down to 3152 at 8:48, and then rallied up to 3163.00. The ES then dropped down to a new low of 3144.25, had one last rally up 5153.25 at 9:30 then sold off down to 3109.50, rallied up to the 3125 area and then flunked down to 3105.50, rallied up to 3114.24 and then made a new low of the day by 1 tick at 3105.00. The ES short covered off the low up to 3122.25, ducked down to a higher low at 3108.00 around 10:42, popped up to 3133.25, pulled back down to 3125.50 at 11;31 and then shot up to 3142.75 at 12:40. The next move was down to 3130 and then back up to a new high of 3145.50, pulled back down to 3140.75 and then got hit by an algo / buy stops buy program that pushed the futures up to 3154.50 as Trump spoke about a possible COVID-19 vaccine. After the buy program, the ES sold off to 3131.25 at 2:35. On the 2:50 cash imbalance, the ES traded 3149.25, traded 3142.00 on the 3:00 cash close and settled at 3140.75 on the 3:15 futures close, down 24.25 handles or -0.77% on the day.
In terms of the ESs overall tone it looked like the big investment firms were buying tech and selling S&P stocks of the day’s overall trade volume was HIGH at 1.9 million.
Our View
Out Of Balance / AMZN UP 536 POINTS, 20% +$270B IN 9 TRADING DAY
The idea of trading is to pick up on as many nuances as possible and one that is starting to really stick out is the disparity between the Nasdaq Composite and the S&P 500 cash. There is a rule in stock trading that says it’s dangerous when small sectors create such big gaps between the other sectors. At today’s close the S&P is still down x% YTD and the Nasdaq is up X%. I think we all know that there has been a big switch out of the Dow and S&P into the NASDAQ but the question is becoming ‘how high is high?’ Does this mean the markets are going to sell off? I think they will but right now it’s only going to be small pullbacks and larger rallies.
I am not going to do a long drawn out VIEW today. It’s been a wild week of ups and downs and to be honest; I don’t have much to say.
Our view is two-sided. The first part is that the overall trend remains higher but the markets are acting skittish. The NQ made a new high for the year yesterday and my concern is that we could be nearing some type of tech sell-off / reload.
Danny Riley is a 39-year veteran of the CME trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.
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