by Danny Riley

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Headwinds not holding bulls back.

FOMC minutes on deck

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Our View

While the stock market received a boost from Donald Trump’s pick of Scott Bessent for Treasury, other markets did not fare as well. Bitcoin dropped to $93,000, and gold tumbled by as much as 3.7%, falling to $2,615.58 per ounce. This marked the biggest intraday decline since June 7.

Oil prices also fell by more than $2 per barrel on Monday following reports that Israel and Lebanon have agreed to the terms of a deal to end the Israel-Hezbollah conflict.

Today’s economic calendar is full with New Homes sales at 10 am and FOMC minutes at 2:00 pm being the headliners for the day.

Our Lean

Was I surprised by the ES and NQs drop after the open? Not at all. I think any 30- to 50-point drops will be a buying opportunity right into the end of the year. Did they go too far too fast? Yes, but that’s not going to change the course of the S&P going into the end of the year. Yesterday the the yield on the 10-year note curve inverted, with the yield on the 10-year treasury note settling below the yield on the 2-year note for the first time since early September.

Our lean, buy and 30- to 50-point pullbacks, new contract highs are very probable.

MiM and Daily Recap

The ES traded with a large gap up on the Globex open in reaction to the Bessent news and traded up to 6033.75 during the Globex session and opened Monday’s regular session at 6026.75. After the open, the ES dropped to 6019.25, then rallied 20.75 points to reach 6040.00 at 9:43, just 13.25 points off the all-time high. It then sold off 57.75 points to hit 5982.50 at 12:48, before rallying 24.5 points to 6007.00 at 1:48. Subsequently, it sold off 11.5 points to a higher low of 5995.50 at 2:24 PM and spent the remainder of the day in a slow grind upward.

At 3:50 PM, the ES traded at 6001.00 as the cash imbalance showed $235M to sell, and by the 4:00 PM cash close, it reached 6005.75. After 4:00 PM, the ES climbed to 6014.50 and settled at 6012.75, up 19.5 points (+0.33% from cash close to close but down 21.25 points cash open to close only partially successful in protecting the gap open.

The NQ settled at 20,899.50, up 49.75 points (+0.24%), the RTY settled at 2452.60, up 39 points (+1.62%), and the YM settled at 44,859.00, up 464 points (+1.05%).

In the end, there was a powerful rotation into the Dow and Russell. While the overall tone for the ES and NQ was positive, the big gap up and rally used up an enormous amount of buying power. There were a total of 1.539 million contracts traded, comparable with recent volumes.

Technical Edge

MTS Levels:

How to read/use the MrTopStep Levels

Fair Values for November 26, 2024
- SP: 17.79
- NQ: 66.61
- Dow: 103.36

Daily Breadth Data 📊
- NYSE Breadth: 69.5% Upside Volume
- Nasdaq Breadth: 66.1% Upside Volume
- Total Breadth: 66.8% Upside Volume
- NYSE Advance/Decline: 74.2% Advance
- Nasdaq Advance/Decline: 67.5% Advance
- Total Advance/Decline: 70.1% Advance
- NYSE New Highs/New Lows: 456 / 17
- Nasdaq New Highs/New Lows: 564 / 81
- NYSE TRIN: 1.40
- Nasdaq TRIN: 1.05
Weekly Breadth Data 📈
- NYSE Breadth: 64.1% Upside Volume
- Nasdaq Breadth: 66.9% Upside Volume
- Total Breadth: 65.9% Upside Volume
- NYSE Advance/Decline: 72.6% Advance
- Nasdaq Advance/Decline: 68.7% Advance
- Total Advance/Decline: 70.6% Advance
- NYSE New Highs/New Lows: 394 / 140
- Nasdaq New Highs/New Lows: 460 / 518
- NYSE TRIN: 1.18
- Nasdaq TRIN: 0.98

Guest Posts

Daniel Salguero – @tradrr.com

Coming into the holiday trading week with reduced hours, we’re pushing forward levels from the previous week to consider how, from last week’s chop fest, we grinded up through the middle of the Composite ledge. Tapping the topside of the ledge and building some volume just above it keeps the bull case strong as we begin to bump our heads at the Node above. First goal being to clear past the LVN that was set and confirmed near the beginning two weeks of this month; with the current adjustment of the composite, the way getting through that LVN seems to be to grind volume into the divot to create proper structure to knock out above the 21300’s. Shortened trading days for the latter half of the week are preceded by FOMC minutes on Wednesday as a final hurrah before heading into December.

Room Summaries

Polaris Trading Group Summary – Monday, November 25, 2024

Morning Session: Active and Profitable

Initial Long Bias: The day began with a lean towards long trades, targeting dips to the VWAP zone. Early success came as PTGDavid called the Target Master T2 Zone (6038-6041), which was hit by 9:51 AM.
Dynamic Adjustments: Shortly after, a bear shift was identified, prompting a pivot towards sell-side trades. This adaptability showcased the importance of responding to market structure shifts.
Key Trade Achievement: The gap fill objective was a highlight of the morning. PTGDavid identified the possibility of a full gap fill by 10:12 AM, and by 12:17 PM, the room celebrated a well-executed play as the gap was filled.

Midday Lesson: Plan and Structure

Educational Insights: A robust discussion on the importance of having a clear trade plan took place. David emphasized defining a personal plan of action for setups, particularly the “Whiplash” configuration. Traders were encouraged to write detailed notes for their strategies to eliminate second-guessing.
Whiplash Trade Setup: Around 12:34 PM, David highlighted a potential “Whiplash” long setup, which materialized successfully by 1:16 PM with a reclaim of the pivot at 5993.50.

Afternoon Session: Slow and Cautious

Lack of Edge: The afternoon session lacked significant opportunities, described as a “snails race.” Traders were advised to remain patient and avoid forcing trades when market rhythm offers no clear edge.
Notable Observations:
- Bulls maintained an upward trajectory in the value area.
- A late iceberg sell order at 6005 acted as a cap for the session, but buyers showed strength in sweeping these orders toward the close.

Closing Notes:

The day closed with a strong AM session and lessons in adaptability and planning. David’s focus on teaching structure-based trading reinforced the room’s commitment to disciplined decision-making. Despite a quieter PM session, the overall trajectory for bulls remained intact, with a $650M MOC buy imbalance supporting optimism.

Key Takeaways:

Be Prepared: Success in trading often hinges on having a detailed plan for each setup.
Adaptability Wins: The shift from long to sell-side plays in the morning demonstrated the value of flexibility.
Patience is Crucial: The PM session’s slower pace reinforced the importance of waiting for clean opportunities.

An excellent morning session highlighted by precise calls and a profitable gap fill trade!

Discovery Trading Group Room Preview – November 26, 2024

Market Overview:
- Key Events: The Fed meeting minutes will be released today, a day early due to the Thanksgiving holiday.
- Geopolitical Update: Former President Trump announced plans for tariffs if re-elected, including 25% on Mexican and Canadian imports and an additional 10% on Chinese goods. Markets reacted with stock futures and gold declining, while the USD gained strength.
- Market Performance: On Monday, the Dow closed at a new record high, with the S&P 500 and Nasdaq 100 rising 0.3% despite a 4% drop in Nvidia (NVDA).
- Crypto Update: Bitcoin fell below $94,000, marking a 6% decline in three days, though the total cryptocurrency market cap has surged by over $1 trillion since the election.
- Earnings: Key reports pre-market include Best Buy (BBY), Burlington Stores (BURL), DICK’s Sporting Goods (DKS), Analog Devices (ADI), and others. Post-market earnings feature Dell (DELL), HP (HPQ), Autodesk (ADSK), CrowdStrike (CRWD), and Workday (WDAY).
- Economic Calendar: Data releases include S&P/Case-Shiller Composite-20 HPI, Consumer Confidence, New Home Sales, and Richmond Fed Manufacturing Index.
- Volatility and Technicals: Volatility remains elevated with the ES’s 5-day average daily range at 72 points. Overnight large trader volume reflects bearish bias heading into the US session. The ES is navigating the middle of its intermediate uptrend channel, with Monday’s high serving as a key reference point.

ES – Week over Week

Bulls have done a masterful job of powering through the last selloff, eastablishing a foothold here above 6000, but just. Contract highs are in the 6050 area, expect some resistance there, but once that line goes the shorts will be forced to buy again, unless they are right. Bears are expecting some type of geo and/or political incident to drive the markets lower. Even if that happened it would be a buying event as money seeks safer havens. Watching for 5995 to hold else we are looking back down at the 5900 area.

NQ – Week over Week

NQ needs a new jockey, Still digesting those three up-days at the beginning of November that took us to new highs. Watching to see if they can put a support in at 21000 as a base for a higher high. Downside trend reversal is down below 20500.