Market Review
The more things change the more they stay the same.
I did not know the POTUS had cufflinks? Never saw them before…
The bust of Churchill got shoved in the closet and a new union leader Cesar Chavez sits front and center now. Curtains look the same. Just moved the flags and brought in a new seat. It does not look like he’ll be using the phone very much. Maybe just drink a sip of coffee a time or two. He does have a stack of paperwork though. Looks like it was just waiting for him to get in…If you want to look at the same room when Trump had it, it’s on this website.
The picture is about the middle third. I cropped the picture. I wrote that two years ago.
Yesterday, all the snap and ginger was taken out of the market. Most traders thought as WB might have said; The PEONS got over their skis. Those in the know just went short at the open and waited with a smile on their face as Dec pulled ahead of the Adv on the downside as the volume started to increase.
Volume Wednesday was low, around 1.0M. As I indicated in last Friday’s 1/15 opening print, we needed to see price take out those offerings on greatly increased price spread and increasing volume. Volume Thursday was 866K.
Not saying we can’t get higher later this year, just will need to see more than promises and hopes for a better day. If we do take out the previous high today, we need to see increased price spread and increasing volume for the high to stick.
Looking Forward Friday, January 22, 2021
As I write this Globex is probing the 3828 handle. I had that as a level yesterday. It was a nothing burger day with a 17- handle trading range. That does not fare well for the bulls. It’s earning season so anything goes. Looking at the news, the projections for 400K which is the current death rate up to half a million is projected.
I first started tracking it on January 12, 2020, when four died and folks were fleeing the Asian lands and now 375 days later, it’s 400,000 folks… It’s going to be a news catalyst for months. Soon, the market may respond like it just found a pile of week-old fresh fish. I’m seeing selling but it’s very sly.
Today is the end of the cycle and end of the week. Not really seeing any company that can move the needle today. Yesterday’s high was checked twice by the previous day’s high. WB’s clock indicated that before the open. I talked about that in the PROS and NUMBAHS.
Globex has lost that high. On the daily chart it looks like buying pressure challenged the high and closed on the lows. PMI & Existing Home Sales at 10:00 could move the needle. For now at least it looks like price is being driven by the news of Asian markets responding to more outbreaks in their lands.
I give you the best of the old school market technicians, JP Morgan, Herriman, Kearn, and Livermore. The traders of the 1930s. How they may have seen the market. I use the lens of Richard D. Wyckoff Principles and Procedures and through the eyes of WB’s hidden internal clock. The clock that controls all turns intraday every day.
We had a good week this week. Our subscribers have been very lucky with the levels given: no trade Monday, 25 points, Tuesday, scratch Wednesday, and 2 points Thursday. Total for the week 27 points, which would be $1,350 on 1 lot and $4,050 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 you have not taken the time, now would be a great time for you to subscribe. After you subscribe drop me an email at trader@wyckoffamtrader.com we’ll set up a time to talk and help you discover how using WB’s clock can give you the gift of timing that you need in your trading life.
Economic Calendar
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In the Tradechat Room
MiM
Yesterday’s selling MIM with a 1.5B sell flashing early with a flip set up a nice closing short. Another great sign for continuing weakness was that the low tick of the day showed sellers wanted out at the close.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
Covid Corner:
The U.S. continues to improve in the daily new cases category with almost all states now reporting stable or falling numbers. Death usually lags a good 10 to 14 days and we are just now getting some good numbers there with 26 states reporting falling daily deaths, 15 stable and 10 with rising death numbers.
Wear your masks!
Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line)
Stay home!
Take your Vitamin D!
Chart(s) of The Day
US index futures drop amid a global selloff on renewed virus risks. President Biden unveiled a strategy to combat the virus while warning the pandemic will worsen before it improves. Hopes for fresh US stimulus to smoothly pass the Senate are fading as GOP opposition increases. S&P 500 and Nasdaq 100 futures signalled a down day for US stocks after the indices eked out records on Thursday on the back of gains for tech companies. IBM tumbled 8.5% in premarket trading after reporting fourth-quarter revenue that missed expectations.
December E-mini S&P futures -0.8%, Nasdaq -0.7%, Russell 2000 futures -1%, Dow futures -0.8%. E-Mini S&P is testing the .382 retracement on the week, initial key Fibonacci support.
Intel gave an upbeat forecast for the current quarter on continued demand for personal computers that enable working and studying from home. The company sees adjusted EPS $1.10, estimate $0.95. The stock jumped +6.5% on the day, but is lower by 4.5% in pre-market trading after saying it plans to make most of its chips internally by 2023. The company is probing whether someone gained early access to its earnings report, forcing it to release results early yesterday.
Banks and financials have seen profit-taking this week, after rotation into bank shares led to a more than 100% gain from the March lows. XLF fell over 1% yesterday and is down another 1% pre-market. The bank ETF (KBWB) is down 1.4% pre-market after falling 1.38% yesterday.
GLOBEX
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3812.75 | Opening Print: 3815.50 |
| Low: 3792.75 | High 3852.50 |
| Volume: 180,000 | Low: 3811.25 |
| ES Settlement 3833.50 | |
| Total Volume 1.3 M |
S&P 500 Futures Recap – Trade Date January 21, 2021
S&P 500 Futures: Nowhere To Go But Sideways
After trading in a 17.00-handle overnight range, the S&P 500 futures opened Thursday’s cash session at 3849.25, traded the daily low of 3836.50 in the opening half-hour, and then rallied up to the daily high of 3853.75 just after 10:00. The rest of the morning traded lower, printing a higher low of 3837.25 just before 11:30, and then in the afternoon, pushed higher to re-test the morning high before settling at 3846.25, up 1.75 handles on volume of just over a million contracts traded. In terms of price action, it was a sideways session that traded inside of Wednesday’s range.
Our View
IBM Earnings Fall Short of Expectations / S&P and Nasdaq Futures Fall
After a record-setting week where Apple gained 7.7%, Facebook gained 8.6%, and Microsoft gained 5.8%, IBM fell 6% yesterday after the company failed to meet its earnings expectations. Prior to the report, the S&P and Nasdaq futures were trading near their respective highs of the day but when the MrTopStep MIM started showing a big sell imbalance the futures started to weaken and the negative IBM earnings report only added to the weaker tone going into the close. I said a few times in the MrTopStep forum that the markets had gone too far too fast and after a weak close the futures fell sharply on Globex. At 6:30 am the ES is down 29 and the NQ is down 80 points and IBM is down nearly 10% in the premarket. With the Russell up 9% on the year my comment that the markets have gone too far too fast seems like a fair statement.
Our view, I was right about selling the open yesterday and buying the pullback but this morning is kind of a wild card. That said, my lean is to buy the lower open or the first drop after the down open using tight stops. I know the markets look weak but if you go back and look at some of the recent Friday drops they tend to end up NHOTC or a Late Friday RIP. If I’m wrong about the early buys I may just call it a day. I had a big week and Fridays are my worst trading day.
Danny Riley is a 39-year veteran of the CME trading floor. He ran one of the largest S&P desks on the floor of the CME Group since 1985.
As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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