Attention traders!!! The S&P 500 futures are going ‘nowhere fast.’ After another big selloff and rally, the real question is, who is winning? The algorithmic programs are winning, that’s who!
Our call was to sell the early rally and buy weakness, which was the correct call, but it’s not the call that was astonishing. It was the level of algorithmic programs running the downside and upside buy stops that was astonishing. Nothing but a big old squeeze job. Additionally, the AAII sentiment survey swung to a bearish extreme, suggesting oversold near term, and more room to run higher. The 27 point swing in the bull-bear spread was a nearly 2SD event.
Today William Blount is doing the Opening Print. WB, as he is called in the MrTopStep trading room, supplies his own mix of technical analysis. While he has told me some of the things he uses to come up with his levels, it’s not just one thing that he uses. WB has combined years of experience in developing a very precise set of ‘levels’ in the S&P index. Today you will get both an idea of what WB is thinking and feeling, and also the levels he provides to the MrTopStep trading room.
William Blount
The Opening Print
William Blount filling in for Danny Riley. Welcome to the ‘dog days’ of Summer. A time of seasonal weakness, ‘hols’ in Europe, and vacations until after Labor Day..
Next week as August kicks into action, we find the ‘Sell in May’ crowd still owning the crown with the May 21, closing high still intact at 2130.82.The all time extreme high was the prior day at 2134.72. At MrTOPStep I was alerting for a high on May 22 plus or minus one trading session.
MrTopStep members and readers of WB’s Numbahs’ observations have been well served since the February 6-9, 2015, (see chart) breakout of the diamond on stilts pattern to stay focused on
a complex corrective market with special attention to the 2.5-4 trading day nominal cycle. It assisted on pinpointing the March 22 high, the June 22 high, and the July 7 low.
This past week has been no different All readers were alerted to look for a Nosebleed rally on Monday in the daily commentary that could carry the market to hard resistance at 2103.5 SEPT. Futures..Readers were also provided a specific place on the S&P 500 cash index to be alert for the low @ 2063.53 correlated to the 2058 SPOT ES MINI (these SPOTS are peculiar to my work)..As of the CLOSE on Thursday, we are still negotiating rather or not price is going to accept or reject the KEY PRICE at 2103.5.
There is an old market saw ‘support becomes resistance and vice-versa’. If one simply looks at Tuesday’s confirmation day that the 2058 SPOT had held at the exact cash price given in the pre-open commentary and reiterated in real time on occurrence , you can see that the TUESDAY high of day and close were 2088.2 and 2087.5 respectively using the large pit traded contract during regular trading hours.This was followed on Wednesday with a Low of day at 2087 after
an opening price of 2088.2 and price spent the remainder of the day forging ahead to the 2103.5
SPOT given on Monday.
What happened today? WB observation readers were alerted to look for a down early in the day via the daily commentary and when price went through 2090 ES (the electronic small contract ) @ 9;42 eastern an observation was made that the first shot at a low was here and shortly thereafter the idea of 2087 was given as .a risk marker. Over the next hour 3 other observations were given as follows: price need to rally through 2091.5 , the post FED announcement prior daily low, that the real price to be negotiated was the 2095.5 SPOT by the daily open at 2095 and the last hour of the day would typically be a high.It ended up being the high of day.
None of this is ‘magic’ , it was just a simple case of looking at intraday small time frame charts since 1984!! , knowing to write down the OPEN, and understanding that ‘old resistance often becomes new support’ as well as the potential for a double bottom today at 2087.
What next?? Today is END OF MONTH and price closed at a key price on Thursday as stated earlier (negotiating 2103.5 SPOT) and given as hard resistance on Monday. Chicago PMI and
Michigan sentiment will be released .Were it not for the End of Month fun and games, the Bulls would have stronger odds in their favor of going after the next resistance levels at 2016.6-2108 and 2112 SPOT on ES MINI FUTURES.The Bears accomplish nothing if they do not kill 2095.5 SPOT and go after the double bottom at 2087 ES.
In the mean time Keep enjoying this slow boat to CHINA flying under a Greek flag with ‘Skipper’ Yellen and her first mate ‘Gilligan’ Draghi BUT make sure you have the proper SPOTS on your navigation chart in advance.Next week I will be discussing some unusual events that have occurred in August since I began as a retail broker in 1978.
In Asia, 9 out of 11 markets closed higher (Shanghai Comp. -1.13%), and in Europe 7 out of 12 markets are trading modestly higher this morning. Today’s economic calendar starts with Employment Cost, Chicago PMI and Consumer Sentiment and earnings from XOM, CVX, PSX, STX, NWL, AXL, RCL, LPNT, BERY, IMS, PEG, ITT, AEE, ENB, HMC, AON, TDS, LM, SWC, WY, TYC, and USM.
Our View: Boy, the bears can run but they can’t hide. One of these days I would like to tell you that something big is going to happen, and the markets are going to move big, but I don’t think that’s going to happen anytime soon. Traders, the ES is stuck in a range—2070 to 2130—and anything outside of that is an extreme. I think the ES is tired; the volumes are dropping again. We lean to selling the early rallies keeping in mind that there could be some profit-taking on the last trading day of July.
“S&P 500 Futures and the Short Side Pain Game”
As always, please use protective buy and sell stops when trading futures and options.
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In Asia 9 out of 11 markets closed higher : Shanghai Comp. -1.13%, Hang Seng +0.66%, Nikkei +0.30%
- In Europe 7 out of 12 markets quoted are trading higher : DAX +0.07%, FTSE -0.15%, CAC +0.32%, MICEX +0.08%, at 6:00 am CT
- Fair Value: S&P -6.64, NASDAQ -8.96 , Dow -82.83
- Total Volume: 1.28mil ESU and 3.6k SPU traded
- Economic calendar: Employment Cost, Chicago PMI and Consumer Sentiment.
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