Risk persists.  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Let’s See if the S&P Can Bounce Today

Risk persists.

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Our View

There was a brief discussion in the MrTopStep chat about the pressure/anxiety people are feeling. At least in my life, I can clearly say we have never faced more problems than we have today.

Do I worry? Yes.

Do I get anxious? Yes.

I think part of this goes back to my trips between the US and the UAE and how advanced the US was and how far behind Dubai was — even after it began modernizing the country. The United States has been the envy of the world and the global sheriff, but now everything is so polarized.

Even back then, I was told not to go to certain areas in the UAE…but I went anyway. Only in a few of the smaller emeritus did I get the long looks, you could feel the vibe was totally different — like dangerous.

I could not speak Farsi, but I did understand some words. I guess it’s fair to say the US/Middle East relations have always been difficult, but Iran is at the epicenter. Recently, a headline hit saying, “Palestinian data provider says the internet is cut off; Israeli army forces ‘expanding their activity’ in Gaza.”

I guess it won’t be long until we see if other actors are going to join the fight. Most of you know I have been warning about the possibility of WWIII and at the current trajectory, the odds have improved. In conclusion, there have been times when Americans were welcomed guests in the Middle East, but that time has come and gone.

Our Lean

It’s hard to have a forward look when it comes to the stock market right now. While the ES may bounce after the full invasion of Gaza, I don’t think the weakness in the ES is just going to disappear.

Our Lean: The news is out and the big question for today is, can the S&P rally? It can and there are a couple of things that could help that idea along:

  1. Mondays tend to be the lowest volume trading day of the week, barring some major incident, it could mean some ‘thin to win’ type trade.

  2. The S&P has been up 15 of the last 16 Mondays.

  3. The PitBull’s rule about the S&P rallying early in the day and early in the week — but the last two trading days of October are today and tomorrow, so there could be a lot of two-way buying and selling.

I want to be a buyer of the pullbacks and note that the upside buy-stops could be targeted today, which are building between 4186 and 4220.

For those of you who like HandelStats levels, here they are:

  • Upside: Trade and hourly close above 4166 targets 4170.75, then 1 sd at 4176.71. Hourly close above there targets 4179 the 4183. Hourly close above there targets 2 sd at 4216.43, then 4222.25.

  • Downside: Trade below 4159.25 targets 4152.50, hourly close below there targets 4:15 settlement at 4137. Hourly close below there targets 4120.75, hourly close below there targets 4105, then 4097.35.

MiM and Daily Recap

ES Recap 15-min

The ES rallied up to 4185.00 on Globex and opened Friday’s regular session at 4172.75. After the open, the ES traded 4175.75 and then sold off down to 4154.25 at 10:03, rallied up to a lower high at 4172.50, and then sold off down to a new low at 4149.00 at 10:44. After the low, the ES rallied back up to the VWAP at 4176.25 at 11:18 and then traded all the way down to 4126.50 at 2:07. The ES rallied up to 4142.50 and then sold off down to new lows at 4122.75 going into 3:00.

After the pullback, the ES back-and-filled until 3:31 when it ran up to 4137.50 and dropped down to 4122.25 at 3:41 as the early imbalance showed $638 million to sell. The ES traded 4129.50 as the final 3:50 cash imbalance showed $315 million to sell, traded down to 4126.75 and traded 4138 on the 4:00 cash close. After 4:00, the ES traded up to 4141.50 and settled at 4136.50, down 24 points or -0.58% on the day.

In the end, all I gotta say is “failed rallies and broken hearts.” In terms of the ES’s overall tone, it was to “sell every rally, big or small.” In terms of the ES’s overall trade, volume was steady: 328k trade on Globex and 1.8 million on the day session for a total of 2.182 million contracts traded.

Technical Edge

  • NYSE Breadth: 22% Upside Volume

  • Nasdaq Breadth: 40% Upside Volume

  • Advance/Decline: 25% Advance

  • VIX: ~$20.75

ES

Levels from HandelStats.com

ES Daily

  • Upside: Trade and hourly close above 4166 targets 4170.75, then 1 sd at 4176.71. Hourly close above there targets 4179 the 4183. Hourly close above there targets 2 sd at 4216.43, then 4222.25.

  • Downside: Trade below 4159.25 targets 4152.50, hourly close below there targets 4:15 settlement at 4137. Hourly close below there targets 4120.75, hourly close below there targets 4105, then 4097.35.

NQ

NQ Daily

  • Upside: Trade and hourly close above 14379 targets 1 sd at 14439.54. Trade and hourly close above there targets 14553.62, hourly close above there targets 2 sd at 14613.07.

  • Downside: Below 14360 targets 14341, then 14331.25. Hourly close below there targets 41313.88, hourly close below there targets 4:15 settlement at 14266. Trade and hourly close below there targets 14159.25, hourly close below there targets -1 sdat 14092.46. Hourly close below there targets 1030.25, then 13939.80, then -2 sd at 13918.93.

 

Worth Noting — From Goldman Sachs’ Briefing

“Gold rises amid Middle East turmoil

Gold has rallied along with other haven assets since Israel was attacked earlier this month, with the price of the precious metal recently rising two standard deviations as geopolitical tensions increased. Market prices indicate a growing probability for higher gold returns (known as right-tail risk), but not to the degree that was seen in the first weeks after Russia invaded Ukraine in 2022, according to Goldman Sachs Research. The latter may be in part because rising real (inflation-adjusted) Treasury yields have been a drag on gold this year (investors don’t receive yield from commodities like gold).

Goldman Sachs Research finds that the implied volatility (the market’s forecast for price fluctuations) for haven assets has risen alongside equity volatility, but it’s still low compared with recent highs when geopolitical or recession concerns were particularly acute. That’s especially true for gold, whose volatility reached levels that were 1.8 times higher in March 2022.”

 

Economic Calendar

 
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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