Earnings, Numbers, Election, Fed just more bricks in the wall

Volatility is back

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Our View

Let’s get down to the nitty-gritty. Thursday’s declines sent the S&P 500 to its first monthly loss in five months. The index fell 1.9% Thursday, breaking a 29-day streak without a 1%+ daily loss—the longest in three years. October’s close left the S&P down 1% for the month, while the Nasdaq had its worst day in two months, falling 2.8% and down 0.50% overall in October. NVDA dropped 4.8%, and the VIX hit 23.52—its third largest October spike during an election year. Traders are now betting that the Fed could raise rates by a quarter-point at next week’s meeting. Clearly, volatility is on the rise.

MiM and Daily Recap

The ES reached 5853.25 on Globex before pulling back to 5801.00, and Thursday’s regular session opened at 5807.25 which turned out to be the high for the day. After the open price dropped 54.25 points down to 5752.75, rallied 14.5 points up to 5767.25 at 11:24, sold off 16.75 points to a new low at 5750.50 by 11:45, and then rallied 19.5 points up to 5770.00. Following that rally, ES dropped down to 5748.50 at 2:09, rallied 8.75 points up to 5757.25, then declined to a new low at 5747.00 at 2:30. A rally followed, pushing ES up to 5767.75 at 3:27, before dropping 13.25 points to 5754.25 at 3:35. After that pullback, the ES rallied up to 5760.00 at 3:45 and traded 5768.00 as the 3:50 cash imbalance showed $1.1 billion buy and popped rallied up to 5770.50, then sharply sold off to 5734.50 at 4:03 after AMZN and AAPL beat expectations but failed to boost stock prices. The ES briefly rallied back to 5755.50, pulled back to 5733.25 at 4:28 and settled at 5738.50, down 113.5 points, or -1.94% on the day.

The NQ settled at 20,043.00, down 491.75 points or -2.39%; the YM settled at 41,951.00, down 412 points or -0.95%; and the RTY settled at 2,205.50, down 42 points or -1.87%. The yield on the 10-year note recently climbed to 4.309%, up from 4.264% on Wednesday and 3.798% at the end of last month.

In the end, the markets saw a significant washout, with strong tech earnings still being met with selling pressure. In terms of the ES’s overall tone the NQ was a particular weak spot. In terms of the overall trade, volume was higher at 1.87 million contracts traded.

How to read the MIM

Technical Edge

Fair Values for Nov-01-2024 are as follows,
SP: 32.45
NQ: 127.29
Dow: 177.71

MrTopStep Levels:

How to read/use the MrTopStep Levels

Guest Posts:

Jeff Hirsch: @TradersAlmanac

From data in the 2025 Stock Trader’s Almanac on page 90, the first trading day of November is the fourth best of all monthly first trading days since September 1997 based upon total DJIA point gained. DJIA, S&P 500 and NASDAQ have all advanced 13 times over the last 21 years. Average performance on the day ranges from a low of 0.04% by S&P 500 to 0.13% by NASDAQ over the last 21 years. Following a bearish streak from 2005 through 2011, all three indexes have been up 9 of the last 12 years. In presidential election years (screened in light grey) [Unclear what “screened in light grey” refers to in this context], NASDAQ has been best, up four of the last five.

SpotGamma – Founder’s Notes

What’s Happening in the Market

As we were discussing last night, a break of 5800 likely leads to a rapid test of the 5700 Put Wall. This is what happened today, with SPX closing only 5 points above it. We also mentioned that all the major earnings sold off yesterday (namely MSFT and META) which proved to be the catalyst for a sell-off today: SPY -1.96%, QQQ -2.52%, and IWM -1.66%.

What stands out here in terms of market safety is that SPX opened underneath its VT, which signals to us that it is too dangerous for dip-buying.

The slide down started in the premarket, which was nearly a linear descent. Core PCE then printed mostly neutral and slightly hot on the YoY, and there was a minor negative reaction to that. But the overall drop today was technical with fiercely bearish flows.

What signifies bearish directional influence with max confidence is that calls and puts were moving down together:

What to Watch for Next

The main leg down which we expected from a break of 5800 was realized today, but now SPX has a chance at bouncing off of its Put 5700

Put Wall.

But if that Put Wall breaks, we would interpret that as another broken level in dangerous conditions, and would want to wait for structural confirmation and positive market gamma before re-engaging in equity risk.

Meanwhile, this is now a trader’s market. Please take care with static positions. We expect momentum opportunities to shine in both directions until market safety is recovered. 

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Trading Room News:

Polaris Trading Group Summary: October 31st

On Thursday, October 31, 2024, the trading room focused primarily on short positions as sellers dominated the market, with minimal opportunities for long trades. Early in the session, PTGDavid noted a “spill-down” from the previous session, with price finding support at the morning low of 5750. There was high confluence among key levels, including the Target Master and ATR levels, reinforcing bearish momentum.

David’s guidance was consistent throughout the day, emphasizing patience and discouraging long positions without a clear structural shift. Traders were advised to “milk the short positions,” as price continued to decline past key cycle levels, eventually entering what David called “statistical extreme territory.”

Attempts to reclaim the 5765 level—a critical threshold for any potential upside shift—failed multiple times, signaling continued seller control. David reminded traders to avoid chasing shorts but to stay clear of long positions due to insufficient market support.

In the afternoon, another upside attempt fell short of breaching 5765, affirming the bearish trend. As the market moved towards close, David referenced a sizable MOC (Market on Close) flip from a $1.1 billion buy imbalance to a $3 billion sell, which ultimately led to a significant “smack-down” into the close, aligning with David’s assertion that markets often close in the same manner they opened.

Key takeaways from the day included the importance of disciplined trading by following strong short signals and avoiding unsubstantiated long trades. The emphasis on managing positions with tight stop trails in volatile conditions offered traders a valuable lesson in risk management.

DTG Room Preview – November 1st, 2024

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!