10-Year Yields Near 5%
Can the S&P shake off more strength in yields?
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Our View
Today is the 36th anniversary of the Black Monday, October 19th stock market crash. The attack on the Gaza hospital caused worldwide condemnation and we think the Israeli military incursion is going to cause the war to expand.
This weekend is going to be pivotal and we also think we will continue to see more risk-off type trade. Yes, the earnings have been good, but the Gaza war is overshadowing the good news.
Like I said earlier this week, I’m keeping things short right now. Keep an eye on yields, as the 10-year approaches 5%.
Our Lean
I do not see any reason that the ES can’t trade 4275-4280 today. I can’t rule out some pops, but sell any 30 to 40-point rallies. Keep an eye on the sucky bonds — which hit new 52-week lows yesterday — and use stops. This is not a weekend to ‘just’ be long.
Here are a couple notes from the Pitbull from late-afternoon Wednesday:
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PITBULL: PITBULL :(3:08:32 PM) : 4200 or bust
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PITBULL: PITBULL :(3:08:41 PM) : war tonight
As for levels, Handelstats says this about the NQ:
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Upside: Trade and hourly close above 15033.75 targets 4:15 settlement at 15061.25. Trade and hourly close above there targets 15106.25, then 15155.25. Hourly close above there targets 15186, then 15216.75, then 1 sd at 15227.91. Hourly close above there targets 15247.50, then 15274.50, then 15328. Hourly close above there targets 15376.62 then 2 sd at 15394.56.
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Downside: Trade and hourly close below 15033.25, then 14995.75, then 14981.25. Hourly close below there targets -1 sd at 14894.59, below there 14863.25. Hourly close below there targets 14797.12, then -2 sd at 14727.94.
MiM and Daily Recap
ES Recap
The ES traded down to 4377.25 on Globex and opened Wednesday’s regular session at 4382.75. After the open, the ES rallied up to 4388.50 at 9:35, fell into a back-and-fill from 4375.75 to 4383.00 until 10:00 and sold off down to 4372.00. From there, it rallied up to 4388.25, sold off down to a higher low at 4372.50, rallied up to 4392.50 at 10:21 and then sold off down to 4362.25 at 10:56. For the next 25 minutes, the ES back-and-filled in a 4 to 10 point range before rallying up to 4376.50 and then started to drift back down to 4362.00 at 12:03 and then rallied back up to 4375.50.
After the rally, the ES sold off down to 4351.00 at 1:01, rallied up to 4378.75 at 1:15, sold off down to 4343.25 at 3:08 and then sold off down to 4342.00 at 3:45. The ES traded 4334.50 as the 3:50 cash imbalance showed $1.1 billion to buy and rallied up to 4344.25 at 1:55 and traded 4342.50 on the 4:00 cash close. After 4:00, the ES traded up to 4351.00 and settled at 4347.50 on the 5:00 futures close, down 59.50 points or 1.35% on the day.
In the end, all Hamas/Gaza news and Biden speaking on Israel was a big sell-the-news event. In terms of the ES’s overall tone, it was weak. In terms of the ES’s overall trade, volume was big: 275k traded on Globex and 1.93 million traded on the day session for a total of 2.205 million contracts traded.
Technical Edge
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NYSE Breadth: 17% Upside Volume (!)
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Nasdaq Breadth: 31% Upside Volume
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Advance/Decline: 50% Advance
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VIX: ~$19.25
NQ
Levels from Handelstats.com
NQ Daily
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Upside: Trade and hourly close above 15033.75 targets 4:15 settlement at 15061.25. Trade and hourly close above there targets 15106.25, then 15155.25. Hourly close above there targets 15186, then 15216.75, then 1 sd at 15227.91. Hourly close above there targets 15247.50, then 15274.50, then 15328. Hourly close above there targets 15376.62 then 2 sd at 15394.56.
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Downside: Trade and hourly close below 15033.25, then 14995.75, then 14981.25. Hourly close below there targets -1 sd at 14894.59, below there 14863.25. Hourly close below there targets 14797.12, then -2 sd at 14727.94.
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
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JPM — Many are long from $143-145. This is a longer term swing. Trimmed $153s, then $157.50+ on 7/24.
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Down to ½ position vs. Break-even stop. Can make small, ~10% position trim if we see $160+
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If worried about a larger correction, can sell/trim north of $150. Below entry and no need to stick around in JPM.
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Economic Calendar
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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