Market Review
Taylor 3 Day Cycle
Author: David D Dube (a.k.a. PTGDavid)
Tuesday’s Session was Cycle Day 3 (CD3): Having fulfilled cycle objectives, price failed to extend gains above prior high, at which time the decline began. Price found responsive buyers at projected lower target (4181) as outlined in DTS Briefing 5.25.21. Market on Close Sell $1 Billion capped the session. Range was 33.50 handles on 1.191M contracts exchanged.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Normalized decline projection (4184.50) is in-place, with price trading higher during GLOBEX, as of this writing (7:30 pm Tuesday evening). Range boundaries expected for Wednesday’s session is between 4184 – 4203. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4195, initially targets 4203 – 4206 zone.
2.) Price sustains an offer below 4195, initially targets 4186 – 4184 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistic covering 12 years of recorded tracking history.
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 1 (CD1)
Thanks for reading….PTGDavid
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The annual inflation rate in the US soared to 4.2% in April of 2021 from 2.6% in March and well above market forecasts of 3.6%. It is the highest reading since September of 2008, amid a surge in demand as the economy reopens, soaring commodity prices, supply constraints. There is also a base effect weighing as the coronavirus pandemic dented economic activity bringing the inflation rate to 0.3% in April 2020. The biggest increases were recorded for gasoline (49.6% vs 22.5% in March), fuel oil (37.3% vs 20.2%) and used cars and trucks (21% vs 9.4%). Inflation also accelerated for shelter (2.1% vs 1.7%) and new vehicles (2% vs 1.5%) and rebounded for apparel (1.9% vs -2.5%), but slowed for medical care services (2.2% vs 2.7%) and food (2.4% vs 3.5%). Meanwhile, compared to March, prices rose 0.8%, the most since 2009 while monthly core consumer inflation increased 0.9%, the most since 1996. source: U.S. Bureau of Labor Statistics
Chart of the Day
Health Care Is UBS’ Place to Play Safe Among U.S. Stocks
Health-care stocks are cheap enough to be suitable for investors looking to play defense, according to Keith Parker, head of U.S. equity strategy at UBS Group AG. Parker compared forward price-earnings ratios, based on projected profit, for the S&P 500 Health Care Index and the S&P 500 in a report Monday. The industry was 21% cheaper based on forward P/Es as of Monday, according to data compiled by Bloomberg. Health care is also less sensitive to rising interest rates and higher inflation than other relatively stable industries, Parker wrote.
Our View
Stock Market Takes a Breather; S&P and Nasdaq Fall 0.2%
Both the ES and NQ opened high on Tuesday and then pretty much sold off all day. There were sporadic ‘pops’ and some back and fill but every rally failed. At 9:33 am the ES traded at 4210.00 and then sold off down to 4182.50 at 11:37. After the low, the ES rallied back up to a lower high of 4197.50 at 12:33 and then sold off 18.25 handles down to a new daily low of 4179.25 just after the MiM showed over $1 billion for sale. The ES traded 4183 on the 4:00 cash close and then went on to settle at the previous week’s high of 4185.00.
If you read the Opening Print you would have seen my view as selling the rallies Tuesday and Wednesday. That the ES had gone up too much too fast and the markets needed a 30 to 40 point pullback. As most of you know, I do not write the Opening Print for the $10.00 bucks a month you pay me. I write it because I believe in my heart of hearts that I have a good read on the markets. I know this sounds totally crazy but the charts talk to me. My main daytime tool is following volume and my street smart tool is detecting patterns. I wrote about this years ago when I worked for Rick Barns (Ricky The Rocket). He was one of Chicago’s largest desktop traders. I would pick up the phone in the bonds and he would say ‘what do you think?’ and I would come back with my feel for the flow. After a year of this, he handed me a pencil and a chart and figure chart and told me to start updating it. Over the next few months, he would ask me what I thought and I would still give him my outside view and he would say ‘See, now that you are doing the chart you have a better feel, next week come up and we will go over the chart you’re making.’ I was like, Oh shit I need to update the chart but I never did. So I remember Rick calling me and telling me he got lunch, come up to his office so I walked off the floor, got on the elevator and hit the 12th floor of the CBOT building’s new annex, and then walked into his office. When I walked in he looked up and waved me over to the conference table. Rick had 40 screens on the walls and could trade 20 markets at once. He sits down and says ‘See, I told you doing that point and figure chart would help you, now let’s see it, I want to show you something.’ I slowly reached in my inside pocket and pull the folded chart out and as I leaned forward to hand it to him I said ‘Rick, I’m sorry, I look at the prices all day!’ Rick looked at me and said so you never did the chart? I said, ‘No Rick. I stare at the boards all day. They help give me a feel for price and direction’. He knew I was a street guy and he looked at me and said ‘You have something traders wish they had, you have pattern recognition.’ I know, it sounds funny and I am looking at longer-term charts but what I have found is a lot of short-term moves lead to longer-term lows.
In conclusion, my belief is that it’s a good idea to 1) distinguish the trend, 2) your chart levels, and 3) use your feel for the markets to guide you.
Our view: My guess is there will be some type of early pullback. Sell the early rallies and buy the pullbacks, especially if the ES is down late in the day. Remember, it’s a 3 day weekend… thin to win will prevail.
As we all know, there’s no crystal ball when it comes to trading stocks, options or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk free for 30 days.
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.
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