Our View
Like or dislike the ES, it continues to hold at the 4070 to 4080 level. It seems like things have been slowing down. When things go quiet and volume drops, it makes it easy to push higher.
I had lunch with the PitBull yesterday and he said, “the Fed is still holding up the markets” and the stats favor an up June. I, on the other hand, think that with the Fed’s rate hike next week and the June Quad Witching expiration, this might just be the quiet before the storm.
Do I think the ES can trade higher? Sure. Do I think the ES will hold? Not really.
Our Lean
Looking for the PitBull Thursday/Friday low the week before the expiration. September (ESU) goes to the front month on June 9th, as the rollover occurs before expiration (here’s the CME’s example).
The ES can still go up, but the 4200 to 4220 area has not only been resistance so far, but it also has a lot of key levels in it. It’s a tough area for the market.
Daily Recap
The ES traded down to 4076 on Globex and traded 4082.50 on Tuesday’s 9:30 ET futures open. After the open, the ES dipped down to 4077.75, then rallied 52.25 points up to 4138 at 11:00.
After the high, the ES broke down to 4108.25 at 12:15. Over the next 3.5 hours, the ES rallied up to 4164 at 3:50. The ES traded 4164 as the 3:50 cash imbalance showed $271 million to sell and then sold off down to 4160 and traded 4161.50 on the 4:00 cash close. The ES settled at 4150.75, up 38 points or +0.93% on the day, but it felt much more impressive than that.
In the end, it was another dip and another rip. In terms of the ES’s overall tone, it shrugged off the early weakness again. In terms of the ES’s overall trade, volume was steady all day at 1.64 million contracts traded.
- Daily Range: 88 points
- H: 4164
- L: 4076
Technical Edge
- NYSE Breadth: 71% Upside Volume
- NASDAQ Breadth: 70% Upside Volume
- VIX: ~$24
CTVA — Those who took the long setup from Monday or early Tuesday, consider exiting all or most of the position with this morning’s 10%+ pop. The stock is rallying on its ESG and sustainability report. Leaving some runners is fine, but I would even consider a pre-market exit or reduction to lock in gains.
Overall, most stocks and the market are down slightly. That action bodes well, I think. At the very least, it gives bulls the chance to flip the market from red to green and push higher (while giving us defined risk levels to measure against).
That opportunity is much better than opening higher and puking lower.
Game Plan — S&P 500 (ES and SPY), Nasdaq (NQ and QQQ), AAPL, NVDA
I can’t help but think about what the market is doing here. Yesterday, the S&P and Nasdaq opened notably lower on the day and fell 1% or more at the lows. But it snapped back and closed solidly in the green.
Target again cut its guidance, just a few weeks after providing a weaker-than-expected outlook. A few weeks ago, shares fell 25% in a single session on similar news. This time it opened lower by 7%+ then almost went positive on the day.
Microsoft cut its guidance last week and did go positive despite falling 4% at one point. Apple is holding the key level we outlined yesterday.
So what’s my point?
We’re seeing R2G moves; bullish price action to bearish headlines.
Does it mean we’ve seen the low? Not necessarily. But when combined with the fact that the S&P continues to hold support and the bullish breadth observation from late-May, this price action is, at the very least, encouraging to me on the long side.
S&P 500 — ES
Support keeps holding. If you remove the biases — long or short — the picture becomes quite clear. What’s happening right now?
The ES is holding the 4070 to 4080 area and last week’s low. After failing to break down, it went from red to green on Tuesday and almost tagged Monday’s high. A huge trade for the longs.
Now we are looking at a potential 2x daily-up. Keep an eye on 4165 to 4170. Above that opens the door to the 4200 to 4220 area. That’s a busy zone, but if it breaks, the ES could be looking at 4300.
On the downside, 4100 and the 10-day are key. Below that and the 4070 to 4080 area is back in play. Below 4070 is not a good look for bulls.
S&P 500 — SPY
Consolidating in a prior support zone. 2x daily-up puts weekly-up in play almost immediately, near $417.50. That’s followed by the $421 level and the 50-day.
On the downside, losing $407 opens up more downside, potentially down to the low-$400s. Below $400 and bears have control.
Nasdaq — NQ
Daily-up over 12,740 puts the 12,900 level in play, then the weekly-up spot at 12,950. Above that could put the 50-day in play near 13,200.
On the downside, 12,500 to 12,550 and the 10-day are the risk levels to watch. Below them says “caution” and puts last week’s low in play at 12,440. Below 12,410 (Tuesday’s low) and we shift more toward a “risk-off” view.
Keep it simple.
Nasdaq — QQQ
On May 26th, the QQQ traded up to $301 and closed above $300. It gapped higher on the 27th (the last day of its three-day bullish breadth stretch) and since then, it’s been consolidating.
That’s healthy action — but it’s only healthy if it can break to the upside.
Daily-up over $310.67 could get the QQQ to last week’s high near $314.60. Above that and we could see a bigger push higher.
AAPL
Absolutely fantastic response from the $144 level.
The market was selling off and could’ve broken lower and it didn’t. Now AAPL is slightly lower in the pre-market and it could give us a great cash-flow trade if it goes daily-up over $149.
This isn’t a long-term swing trade, but if we get this action, we can have a tight stop-loss and target ~$150 as our first upside target, then $151 to $152.
Those are tight targets, but the goal would be to get a quick trade, put money in our pocket and ride the last ⅓ to ½ to potentially higher prices.
NVDA
Daily-up over $190 and aggressive bulls can be long against $180. Use a smaller position size to account for the wider risk range. Alternatively, traders can use today’s low as their stop-loss, assuming there is a little cushion between that level and the daily-up trigger over $190.
Small trim at $195 if we see it, then the $200 area/50-day SMA is next.
I am looking at NVDA and AAPL as potential ways to play a market push higher — not hit home runs. If the Nasdaq powers up, these two are likely helping to lead the charge.
Go-To Watchlist — Individual Stocks
*Feel free to build your own trades off these relative strength leaders*
- Numbered are the ones I’m watching most closely.
- Bold are the trades with recent updates.
- Italics show means the trade is closed.
- AMD — Weekly-up at $104.55 triggered, First target achieved at $109.50. → Now look for $115 to $118 next & breakeven stop-loss. Those comfortable with AMD can stay long with it over $100.
- DXY / UUP — Trimmed into $27.50 as the first target. Now looking for $27.70 to $27.75. This tends to be a slow mover and it one we can hold for a while as long as our risk level holds.
- CTVA — triggered long. → Trim all or most into the a.m. 10%+ gap-up. Pre-market trade is okay too. If only limited gains remain at the open, $62.50 to $63 is the first trim zone. $64 is the next spot.
- DLTR — Price Target 1 & 2 hit on the same day it triggered → Now look for $165 to $166 on remaining tranche.
- NEX — Trim some on this opening push above $12.50
Relative strength leaders (List is cleaned up and shorter!) →
- These are on watch for dip-buys:
- XLE
- AR
- XOM
- TECK
- DLTR
- IBM (of all names)
- DOW
- ARCH
- NVA
- XLU
- TMST
- VRTX — trying for weekly-up this a.m.
- AMGN
- MRK
- MCK
- BMY
Economic Calendar
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