The Market Needs a Rest

The NQ enjoyed its 7th straight daily gain

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Our View

After a morning rip and selloff, all three major indices — the Dow, S&P and Nasdaq —- closed modestly higher. Small caps closed the day lower, with the Russell falling more than 1%.

The NQ closed higher for the 7th day in a row, its longest winning streak since January. Maybe the markets go up today, but I have a feeling we could see a down day and possibly a few more. Even if traders are bullish, some rest makes sense after last week’s move.

I think there is a lot of resistance between 4390 and 4420. This rally is short-term over-extended and overbought.

Our Lean

Is today going to be Turn Around Tuesday or Turn-em’ Down Tuesday? I think the latter.

Our Lean: I can’t rule out buy9ng a lower open, but I want to sell the early rips.

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

Upside: Trade above 4374 targets 4:15 settlement at 4382, then 4384.25. Hourly close above there targets yesterday’s high at 4389.50, then 4396. Hourly close above there targets 4403.38, then 1 sd at 4410.69. Hourly close above there targets 4427, then 4431.26, then 4435.50, then 2 sd at 4439.39.
Downside: Trade and hourly close below 4374 targets 4355.25, then -1 sd at 4353.31. Hourly close below there targets 4332, then 4324.61.

MiM and Daily Recap

ES Recap

The ES traded down to 4374.00 on Globex and opened Monday’s regular session at 4382.50. After the open, the ES traded up to 4389.50 at 9:33, sold off down to 4375.00 at 10:16, rallied up to a lower high at 4386.75 at 10:43, and then sold off down to 4364.25, before printing a new low at 1:20. I want to point out that today’s trade is one of the quietest in a long time and despite a few small early rallies, it was a low-volume grind lower.

After the low, the ES bounced up to 4373.25 at 1:47 and then sold off down to a higher low by 1 tick at 4364.50, rallied up to 4373.25, traded down to 4364.50 and rallied up to 4378.25 at 2:47 when I was long 6 ES and 2 NQ:

IMPRO: Dboy :(2:27:30 PM) : flat NQ at 66.00
IMPRO: Dboy :(2:28:24 PM) : long 6 ES
IMPRO: Dboy :(2:28:39 PM) : now that I bailed on the NQ, the ES will fly

As soon as I got out of the NQ, the ES rallied up to 4379.50 at 3:03, 4379.75 at 3:11 and 4380.50 at 3:14 as the early imbalance showed $614 million to buy. From there, it chopped in a 5 to 7-point range until 3:49. The ES traded 4377.00 as the 3:50 cash imbalance showed $1.348 billion to buy and traded 4384.50 on the 4:00 cash close. After 4:00, the ES rallied up to 4385.50 and settled at 4380.25 on the 5:00 futures close, up 1.75 points or 0.04%.

In the end, it was a quiet day. In terms of the ES’s overall tone, it acted tired. In terms of the ES’s overall trade, volume was low: 205k traded on Globex and 1.1 traded on the day session for a total of 1.305 million contracts traded. It was the lowest volume session since Sept. 18.

Technical Edge

NYSE Breadth: 26% Upside Volume
Nasdaq Breadth: 32% Upside Volume
Advance/Decline: 28% Advance
- Last week: Back-to-back 80/80 days for A/D and NYSE Breadth
VIX: ~15

ES

Levels from HandelStats.com

Daily ES

Upside: Trade above 4374 targets 4:15 settlement at 4382, then 4384.25. Hourly close above there targets yesterday’s high at 4389.50, then 4396. Hourly close above there targets 4403.38, then 1 sd at 4410.69. Hourly close above there targets 4427, then 4431.26, then 4435.50, then 2 sd at 4439.39.
Downside: Trade and hourly close below 4374 targets 4355.25, then -1 sd at 4353.31. Hourly close below there targets 4332, then 4324.61.

NQ

Daily NQ

Upside: Trade above 4:15 settlement at 15224.25 targets 15247.50, then 15274.50. Hourly close above there targets 15287.27, then 15328, hourly close above there targets 1 sd at 15363.15, then 15376.62. Hourly close above there targets 15435.50, hourly close above there targets 15477.77, then 2 sd at 15502.04.
Downside: Trade below 15223 targets 15179.25. Hourly close below there targets -1 sd at 15085.35. Hourly close below 15071.75 targets 14957.25, then -2 sd at 14946.46.