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New Highs, NYSE all strength
NYSE: 239 new highs 7 new lows.
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Our View
The ES made its 46th new high for the year. I will review how many of those new highs were made over the last two months, but I know it’s a lot, and it looks like there are more to come. It’s 2:20 PM, and only 557K ESZ24 contracts have traded. The higher we go, the lower the volume. I know it’s a holiday, but volume has been hovering around a million contracts a day, with the most recent low at 950K for the last two weeks. Let’s face it, despite several reasons to sell, the ES and NQ just keep pushing higher.
I moved my ES upside objective to 6200 four months ago, and I still believe it’s possible. However, I think there will be market turbulence when Israel and Iran start clashing again.
Our Lean
I overdid it in yesterday’s OP, so I’m going to scale back today. On October 6, the ES traded down to 5725.25, and yesterday it traded all the way up to 5918.50, marking a 193.25 point gain in 5 sessions and its 46th new high for the year. That said, while we’re in the midst of October expiration week, the Middle East conflict still looms over the markets. It has been a “buy the pullbacks” trade, and it will likely remain that way until the next event disrupts the trend. Last Friday, JPMorgan and Wells Fargo pushed the ES to new highs. Today, Bank of America, Goldman Sachs, and Citigroup report their third-quarter earnings before the open.
Our lean: the train has left the station, and the volume is pitiful. The NYSE saw 430 million shares traded, with over 400 million of that coming on the close. When you account for the 85% of the ES’s volume from algorithmic and high-frequency trading, total customer volume minus Globex was only 112K contracts traded. Plain and simple, the higher the markets go, the fewer trades there are.
The question everyone should be asking themselves is, how long can the markets keep going up without a meaningful pullback? I think there are two ways to approach this: you can sell the early rallies and buy the pullbacks, or just buy the pullbacks, keeping in mind how much the ES has rallied over the last five sessions and the headline risk.
MiM and Daily Recap
The ES made a 5850.00 low and a 5878.24 high on Globex, opening the holiday session at 5876.50. After the open, the ES traded to 5873.00, then rallied 27.75 points up to 5900.75 at 10:02 AM. It pulled back 9 points to 5891.75 at 10:18 AM and then rallied 12 points to another new contract high of 5903.75 at 10:45 AM, before selling off 15 points to 5888.75 at 11:03 AM.
After the low, the ES rallied to 5907.25 at 1:08 PM, sold off 8.75 points down to 5798.50 at 2:04 PM, and then rallied 13.75 points up to 5912.25 at 2:44 PM. Following this, the ES pulled back to 5905.50, rallied to 5918.50 at 3:49 PM, and traded at 5927.25 as the 3:50 cash imbalance showed $810 million to sell. The ES then sold off to 5906.75 and traded 5909.75 on the 4:00 PM cash close. After 4:00 PM, the ES slowly rallied to 5914.25 and settled at 5913.75, up 60.5 points or +1.03%. The NQ settled at 20,638.50, up 225.25 points or +1.10%.
In the end, the historically bullish day started before the open. In terms of the overall tone, both the ES and NQ were firm. As for the ES’s overall trade, volume was low. Only 112K contracts were traded on Globex, and 843K contracts traded during the day session for a total of 955K contracts. I was unable to pull up the historical volume, but yesterday’s ranks as one of the lowest-volume full sessions of the year.
MrTopStep Levels:
Technical Edge
Fair Values for Oct-15-2024 are as follows, SP: 46.04 NQ: 178.13 Dow: 275.47
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Daily Market Recap 📊
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NYSE Breadth: 61% Upside Volume
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Nasdaq Breadth: 70% Upside Volume
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Total Breadth: 66% Upside Volume
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NYSE Advance/Decline: 58% Advance
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Nasdaq Advance/Decline: 54% Advance
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Total Advance/Decline: 56% Advance
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NYSE New Highs/New Lows: 239 / 7
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Nasdaq New Highs/New Lows: 341 / 98
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NYSE TRIN: 1.04
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Nasdaq TRIN: 0.56
Weekly Market 📈
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NYSE Breadth: 54% Upside Volume
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Nasdaq Breadth: 53% Upside Volume
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Total Breadth: 54% Upside Volume
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NYSE Advance/Decline: 52% Advance
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Nasdaq Advance/Decline: 51% Advance
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Total Advance/Decline: 51% Advance
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NYSE New Highs/New Lows: 367 / 70
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Nasdaq New Highs/New Lows: 474 / 337
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NYSE TRIN: 1.16
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Nasdaq TRIN: 0.54
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VIX: ~19.75 (dwn)
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Guest Posts: Daniel Salguero @traddr.com
As the week transitioned into October, the Ultra Tens experienced a break lower from balance, creating a large low volume zone that could be tested and filled if the market moves through the previous week’s double distribution. Failure to reclaim this area may lead to further downside momentum, which could support equities in their continued push higher, as seen on Monday. This negative correlation between equities and treasury products is a key focus moving forward.
Looking ahead, banks’ earnings reports will dominate the remainder of the week, culminating with jobless claims on Thursday and Fed speakers on Friday.
Room Summaries
Polaris Trading Group Summary – October 14, 2024
On October 14, 2024, the PTG trading room witnessed continued bullish momentum as prices stayed above key support levels. PTGDavid noted that overnight bulls maintained control, with price hitting the initial upside target zones between 5860 and 5865. A Line in the Sand (LIS) was established between 5845 and 5850, marking a critical support area.
Key discussions revolved around market dynamics, including the effects of a closed bond market on trading levels and the importance of sustaining bids above key support zones to maintain upward momentum. Throughout the day, traders remained focused on long positions, with opening range targets fulfilled across several markets, including Crude Oil and NQ.
The primary strategy was to maintain a long bias unless a structural shift occurred. The trading cycle indicated a successful call option play, yielding significant returns. The day concluded with a bullish move, achieving the Three-Day Cycle Core Objective at 5915.25, despite low trading volume.
Overall, the mood was optimistic, with traders encouraged to focus on long plays during market dips.
Discovery Trading Group Room Preview – October 15, 2024
In the DTG trading room today, traders are closely monitoring several key market drivers:
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Nvidia’s Impact: Nvidia led a broad market rally, with its stock nearing a record high and pushing sectors, including cryptocurrencies, higher. The S&P 500 and Dow closed at new all-time highs, while Bitcoin and Ethereum surged.
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Oil Movement: Oil prices have fallen for the third consecutive day after geopolitical tensions involving Israel and Iran, with West Texas Intermediate dropping to $71/barrel.
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Q3 Earnings Focus: Major banks like Goldman Sachs, Citigroup, and Bank of America are reporting earnings today, following strong results last week from JPMorgan and Wells Fargo.
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Fed Commentary: Fed Governor Christopher Waller emphasized caution on cutting interest rates, citing concerns about inflation and the job market. Interest rates remain at multi-decade highs, driving money into market accounts.
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Market Volatility and Economic Data: Volatility remains steady, but traders are cautious ahead of the Empire State Manufacturing Index report. Large trader volume is relatively light, with a bearish lean heading into the data release at 8:30 AM ET.
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ES Market Outlook: The ES broke through its short-term uptrend yesterday. Bulls are in “blue sky” territory, but bears may have room to push prices lower if they re-enter the former uptrend channel. Key support levels are 5883/86 and 5741/44.
DTG members can access detailed trade plans and trendlines in the forum for further guidance.
ES 1 week ago
Today – Break out
NQ
NQ – Last Week
Today.. no breakout, but closer
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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