Market Review
Polaris Trading Group: Taylor 3 Day Cycle Commentary Author: David D Dube (PTGDavid)
Tuesday’s Session was Cycle Day 1 (CD1): Following early strength that took price to initial upside targets (2908 – 2912) fell apart as normal CD1 declined, testing the key support zone between 2850 – 2855, settling at 2860.50. We’ve marked 2850 as a key 2-day Line-In-Sand (LIS).
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Having closed low within the range, we have two scenarios: 1.) Violation of CD1 Low (2851), extending, targeting CD2 Violation Level (2836.50). 2.) Price holds CD1 Low (2851), pushing higher on the recovery rally targeting 2877- 2885 zone.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet >> Cycle Day 2
Thanks for reading,
PTGDavid
Polaris Trading Group
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Floored with a selling imbalance, with such a strong opening I thought for sure we would see a buy on the end of the day, not to be. The market went into a sell mode into the close, paused for the MOC data and then basically went flat into the close after a little trip down. Still not a large MOC and still no breadth assigned to one side or another.
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Chart of the Day
Top Stories on MTS Overnight:
- ‘Be a good salesman, talk a big future,…
- USDA To Implement President Trump’s Executive Order…
- Wednesday: GDP, FOMC Announcement, Pending Home Sales
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- Late Selloff Puts an End to Dow’s Winning StreakCoronavirus (COVID-19) Update: Daily Roundup April 28, 2020
- How Boeing Lost Its Way
Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2913.50 | Opening Print: 2908.50 |
| Low: 2851.00 | High 2913.50 |
| Volume: 330,000 | Low: 2852.00 |
| ES Settlement: 2867.25 | |
| Total Volume: 1.6 M |
S&P 500 Futures: #RTY Up 6% In Two Sessions
The Russell 2000 that was down over 30% last Wednesday has rallied 8.27% in 5 sessions. It seems like there is some end of the month rotation going on, buy Russell / sell Nasasq. Carter Worth (who is one of the only people I listen to on CNBC) said that tech stocks tend to sell off after the big tech companies report earnings. That sounds right to me but with the volume is so low it’s hard to see what’s real and what’s not. Either way, the ES has rallied 196 handles from its 2717 low to yesterday’s 2913 high or 736 handles off its 2177 COVID19 low. While this upward price action may continue it’s my guess it won’t end well.
The ES traded 2908.50 on yesterday’s 8:30 CT futures open. The ES rallied up to an early high at 2912.50 thirty seconds after the open and dropped down to 2886.75 at 9:02 am CT. The ES short covered and got hit by several sell programs that pushed the futures down to 2854.00 at 11:00. At 11:35 the ES traded up to 2875.75 and made a higher low at 2855.00. After the low, the ES rallied up to the2874 area, back and filled for a bit then traded up to 2881.50 at 1:32.
At 2:00 CT the ES traded 2876.00, traded 2872.50 at 2:30 and traded 2857.50 as the 2:50 cash imbalance showed $600 million to sell. On the 3:00 cash close, the #ES traded 2856.00 and settled at 2867.25, down 1.75 handles or -0.06% on the day.
In terms of the ES’s tone, I think the big gap up used up a lot of the ES’s buying power and the Moody’s headlines added to the weakness. In terms of the day’s overall trade, a total of 1.2 million ES futures traded with 300,000 from Globex making total volume very low at 900,000 in the day session.
Our View
Moody’s Global Recession Is Deepening Rapidly
The S&P and Nasdaq were already under selling pressure when these headlines hit the tap;
- MOODY’S SAYS GLOBAL RECESSION IS DEEPENING RAPIDLY AS RESTRICTIONS EXACT HIGH ECONOMIC COST
- MOODY’S SAYS OIL PRICES TO REMAIN LOW IN 2020 AND LIKELY MOVE UP ONLY GRADUALLY IN 2021 AS DEMAND RECOVERS
- MOODY’S SAYS CORONAVIRUS PANDEMIC WILL DRIVE A DEEP RECESSION IN 2020 AND LEAVE SOME LONGER TERM MARKS ON GLOBAL ECONOMY
- MOODY’S SAYS IT EXPECTS G-20 ADVANCED ECONOMIES AS A GROUP TO CONTRACT BY 5.8% IN 2020
It also describes where I think this is heading. That said we have to live in the here and now and right now the S&P is coming off a nearly 200 handle rally and actually traded weak. Today is day two of the fed’s two day meeting ( not sure what they can do) and tomorrow Boeing, TESLA, GE, MSFT, FB, Spotify, QCOM, MA, DB and EBAY report. It should be a busy day.
Our view, the VIX made a high at 83.65 on 3/16/20 and made a low at 30.50 yesterday. The S&P has rallied sharply but the news isn’t really improving much and as the economic data continues to come it won’t be just the US that is ‘seizing up’, the entire world will be too. It really feels like another foot is about to fall. Our lean, I have to go back to the tech earning market week. Our lean is to sell the gap up open (if we get one) and buy the mid-morning pull back keeping in mind yesterday’s weak price action.
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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