If Bonds Bounce, Equities Can Too
They ran the sell-stops yesterday.
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Our View
Well we got our down day, but that doesn’t make me happy. It seems like my 10 Deadly Sins are catching up with the stock market. I’m going to make this easy on you today and keep things short. The markets don’t look good, but that doesn’t mean a rip isn’t coming.
The bull’s back broke yesterday. After a few weeks of holding above 4290 to 4300, they finally ran the sell stops that were building below. That was my key warning from yesterday in Our Lean.
I warned my trading room that: IMPRO: Dboy :(10:05:16 AM) : there is a giant line of sell stops 4290.50 down to 4276.
Within minutes the ES traded down to 4373.75. It was that move that set the tone for the day.
Our Lean
Here are some chat room posts right before the ES rallied late in the day. I sold both the ES and NQ a few times and when the trades didn’t make any progress, I thought there could be a rip. At the time of these posts, the ES was trading around the 4355 area.
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IMPRO: Dboy :(3:41:17 PM): something is brewing
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IMPRO: Dboy :(3:41:33 PM): buy imbalances showing up
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IMPRO: Dboy :(3:51:02 PM): sometimes it’s not a chart point, it’s knowing the price action
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IMPRO: Dboy :(3:52:00 PM): I think 90% of everyone in the room thought new lows
And the ES ran up to 4269.50 on the 4:00 cash close.
The bonds are almost 2 full points higher and the 10-yr note is up 28 ticks. Should they hold up, it could put a bid in the index markets. The ESZ traded down to 4235 ovght and is up 8.50 points at 4273.25.
The ES ran a lot of sell stops yesterday and is short-term oversold. Is the decline over? I don’t think so, but I think the odds favor a larger bounce.
Our Lean: Sell the early rallies and buy the pullbacks — especially if the bonds hold. MrTopStep trading rules 101 apply: The ES tends to go sideways to higher after a big down day. I’ve been providing the @Handelstats levels in the Lean for the past week or so and I’m going to keep trading off of those levels, as they have been exceptionally good.
Levels:
Upside: An hourly close above 4272.50 targets 4286-4290 area. Above 4290.38 targets 4304.25 and 1 sd. Above there puts 4313.75 in play, then 4323.25, 4334.50 and then the 2 sd at 4346.
Downside: An hourly close below 4272.50 targets settlement, then 4260.62 then 4248.75. Hourly close below there targets overnight low at 4235.50, then -1 sd at 4228.61, 4214.12 and then -2 sd 4189.48.
*** Downside Stat LOW target for the remainder of the year at 4206.70. That is marked on my chart was made back in July on the highs.
MiM and Daily Recap
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ES 15-min recap
The ES rallied up to 4335.75 on Globex and opened Tuesday’s regular session at 4300.75. After the open, the ES traded up to 4317 at 9:56, down-ticked, then made a lower high at 4316 at 9:54 and dropped down to 4299, a 17-point drop in 6 minutes. From there, it up-ticked a few points and then tanked down to 4273.75, back-and-filled for the next 20 minutes, sold off down to 4364.25 at 10:53, did some small back-and-fill and sold off 4262 at 11:12. For the next 20 minutes, the ES back-and-filled, traded up to 4271.50 and then sold off down to a new low at 4357.00 at 11:39 and slowly rallied up to 4278.25 at 1:03.
After the high, the ES sold off down to 4351.25 at 2:19, traded back up to 4265.25 at 2:25 and then traded back down to 4352.25 at 3:35. Then in one bar, it rallied up to 4263.75 at 3:45 as the early imbalance showed $7 million to sell. The ES traded 4261.50 as the 3:50 cash imbalance showed $375 million to sell and traded 4268 on the 4:00 cash close. After 4:00, the ES traded up to 4269.50, dropped down to 4363.75, and settled at 4262.75 on the 5:00 futures close, down 61.50 points or -1.42% on the day.
In the end, bonds fell 2 points (and hit new lows) and the higher yields finally caught up with the stock market. In terms of the ES’s overall tone, with the exception of a few rallies, it was all sell programs and sell stops. In terms of the ES’s overall trade, volume was high again: 380k traded on Globex and 1.8 million traded on the day session for a total of 2.18 million contracts traded.
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Technical Edge
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NYSE Breadth: 19.5% Upside Volume (!)
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Nasdaq Breadth: 34% Upside Volume
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Advance/Decline: 16% Advance
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VIX: ~$19.75
ES
4290 to 4300 finally gave way. The ES is rebounding this morning. Let’s see if it can gain steam.
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ES Daily
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Upside Levels: Now 4290-4300 is big on the upside.
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Downside levels: 4250, 4235
NQ
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NQ Daily
From Handelstats:
Upside: An hourly close above 14744 targets 14820.50, then 14849.62. Hourly close above there targets 1 sd at 14882, then 14899, then 14941.75, then 14984.25 and 2sd at 15038.74.
Downside: Below 14744 targets settlement, then 14700, then 14657.25. An hourly close below there targets overnight lows and -1sd at 14568.
Guest Post
PTG / Taylor 3-Day Cycle
Author: David D Dube’ (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 1 (CD1): Normal for CD1 is for a decline, as price did, and reached its Violation Level before some type of “relief-rally” started. Prior range was 60 handles on 1.894M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Markets may retest prior lows before a sustained cycle rally unfolds. Key Level to convert to upper support is 4275 handle. As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4275, initially targets 4295 – 4300 zone.
Bear Scenario: Price sustains an offer below 4275, initially targets 4235 – 4230 zone.
PVA High Edge = 4290 PVA Low Edge = 4251 Prior POC = 4468
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics 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 2 (CD2)
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/dafa1615-991c-4d89-8cc1-bda96c35052c/CD2-1024x232.jpg)
Thanks for reading,
PTGDavid
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
Economic Calendar
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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!
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