Danny’s View: S&P 500 Futures Up In Last 10 Sessions

***Important: Our recent video was published last night. Today’s OP is a bit shorter and out a little earlier to give some extra time to take a look. Thanks!!***

Our View

If it took the ES 52 days to fall, how many days does it take to go back up? The bears will say it has already gone far enough. The bulls will say it’s going to keep going. 

For the last 10 days, my calls have been slanted for higher prices. Either sell the early rally and buy weakness or just buy the pullbacks.  The patterns in the market dictate the call and right now that pattern is to:

1. Open higher
2. Rally
3. Pull back
4. Back and fill, and finally
5. Rally again

Helping the pattern is a nearly 60% drop in volume and AAPL up 10 sessions in a row. AMZN and TSLA are up in 9 out of the 10. The PitBull says the rally won’t hold and that his work shows resistance between 4550 and 4600. 

I don’t disagree, but to tell the truth, it feels like the PPT — the Plunge Protection Team — is supporting the markets. 

Our Lean

If you are a seller, the last thing you want to see is the ES trading around 1 million contracts. When the volume is low — AKA “thin to win” —  it makes it easy to do a few quick head-fake sell programs and then flip right back into a buy program. 

While you can catch a high to sell, the easier trade has been to be patient and buy the dips. How long will this last? I don’t know, it’s probably already exceeded most people’s expectations. 

Sell the early rallies and buy the pullbacks with tight stops. I’m not saying today, but like the PitBull, I am starting to think we could be nearing some resistance. 

Daily Recap

The ES traded down to 4514 on Globex at 2:15 am and opened Monday’s regular session at 4529.25, up about 15 points. The ES made an early low at 4525.75 and rallied to 4546 going into 10:00, then dropped down to 4530.25 at 10:22.

From there, it rallied up to a lower high at ~4544 near 11:00 and then sold off 36 points down to 4509.75 at 12:20. After the low, several buy programs started pushing the NQ up and took the ES for the ride up to a new daily high at 4547.50 at 3:44. After a small dip, the ES traded up to 4554.25 as the 3:50 cash imbalance showed $1.8 billion to sell and traded up to 4554.25 on the 4:00 cash close. 

After 4:00, the ES traded up to 4572.25 and settled at 4570 on the 5:00 futures close, up 31.50 points or 0.7% on the day. 

In the end, the Nasdaq was firm and led the market higher, gaining 1.6% on the day. In terms of the ES’s overall tone, it was firm but not as firm as the NQ. In terms of the ES’s overall trade, volume was LOW at 1.14 million contracts traded.

• Range: 62.50 points
• H: 4572.25
• L: 4509.75

Technical Edge

• NYSE Breadth: 52% Upside Volume
• NASDAQ Breadth: 62% Upside Volume 

I have said it before and I’ll say it again: The low-volume, low-breadth rallies are something to keep in the back of your mind. 

As traders, this can be an exhausting exercise, because we are balancing different timeframes in our heads. 

In the short term, bulls are dominating the tape. They are gobbling up the dips and they are ramping the market higher. The S&P futures are now up in 8 of the last 10 days — and one of the two declines came in at just 0.03%. I call that flat. 

That said, there are still multiple concerns out there, while the breadth thing continues to bother me. So that balancing act has been tough. 

Game Plan

Enjoy today’s video on our technical approach to the markets. 

Go-To Watchlist

*Feel free to build your own trades off these relative strength leaders*

Numbered are the ones I’m watching most closely. Please look at these closely, as there are several updates (the most recent of which are noted in bold).

1. PANW — Absolute beauty!! Definitely trimming ⅓ to ½ here at ATHs. Would love to see a further push to the upside. $645 to $650 is the next trim zone.
2. F — Looking for $17.50 to $17.80 as first trim area. 
3. BMY — Trim Spot Hit! | Down to runners or 100% closed. 
4. COST —  Daily Up Triggered — Trimming $565. Would love to see $575
5. DLTR — Weekly-up triggered — $165 is the upside target. 
6. AVGO — Long from yesterday’s midday update | Trim ⅓ to ½ on opening gap-up. 
7. NVDA — Still Looking for $293 on last ⅓ position

• BRK.B — If still in runners, $370 to $375 is last trim spot
• VRTX — Trimmed another ⅓ at $254 on Friday. Down to just runners. 
• TECK
• TU — Inside-and-up week at $25.80
• MCK
• MKC — $98.20 is weekly up and daily up
• CCK
• Energy —XLE, APA, CNQ, CVX, ENB, PXD — robust strength
• ABBV
• ADM, MOS
• CHKP, PANW
• AR 

Economic Outlook

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.

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!