by Danny Riley

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Good Novembers make Good Decembers.

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Our View

December is historically the third-best month of the year for the markets, but it doesn’t always go straight up. There are 15 economic releases this week, including the November jobs report and speeches from two Federal Reserve officials.

According to the Stock Trader’s Almanac, December is the third-best month for major averages, but it can be even better during presidential election years. On average, the Dow gains 1.3%, the S&P 500 gains 0.8%, and Nasdaq rises 0.9% in election years.

The Almanac also anticipates a strong Santa Claus Rally, a positive First Five Days, and a positive January Barometer. These three indicators are known as the January Indicator Trifecta. Historically, when all three have been positive, the S&P 500 has risen 90.3% of the time. If you are a trader, Jeff Hirsch’s almanac would be a great Christmas present to yourself. The almanac was spot on in 2024 and I don’t think that’s going to change in 2025. You can buy it now with this link: Stock Traders Almanac

Here are some links to additional insight from Goldman Sachs:

Our Lean

The November jobs report is on Friday and Fed funds futures are now pricing in around a 66% probability that the central bank will lower rates by 25 basis points at its policy meeting this month. According to the research firm Bespoke Investment Group, there hasn’t been a stock market correction, or a pullback of 10% or more, in the S&P 500 this year. Since 1928, the S&P 500 has averaged a correction once every 346 days.

The market has been stronger in recent years, however, as half the yearly periods since 2000 haven’t had such a pullback. The S&P 500 is up more than 26% in 2024 and is on track for having its best year since 2021.

There are still a lot of situations on the geopolitical front to keep an eye on. Putin is expanding his footprint and there are reports that North Korea will send 1.3 million soldiers to take down Kiev. Clearly, Biden’s allowing the use of long-range missiles has accelerated the Russian hybrid activities including cutting two undersea communication cables linking Germany to Finland. I expect these types of activities to continue to increase before Trump takes office.

Our lean – the ES is still going up but I expect there will be some drops along the way, 6035, 6033, 6028, and a key level at 6019.

MiM and Daily Recap

The ES traded up to 6035.25 on Globex at 5:20 AM heading into Friday’s abbreviated session and opened the regular session at 6023.75. After the open, the ES initially dipped to 6019.00, then rallied 41 points to reach a new all-time contract high of 6060.00 at 12:36 PM. It then sold off 8.5 points down to 6056.00 at 12:56 PM, traded at 6059 as the 12:50 PM (early-close) imbalance showed 404M to buy, and sold off further to 6048.75 before settling at 6051.50, up 36.5 points (+0.61%). The NQ settled at 20,993.5, up 180.50 points or +0.87%.

In the end, sometimes things take a little longer than we would like but we finally got there. A new ES contract high along with the YM.

In terms of the ES’s overall tone, there were some small pullbacks but the markets were firm. In terms of the Es‘s overall trade, volume was in line with the holiday with 792K contracts traded.

How to read the MIM

Technical Edge

Fair Values for Nov 29, 2024:

SP: 16.08
NQ: 59.35
Dow: 99.89

Daily Breadth Data 📊

NYSE Breadth: 58% Upside Volume
Nasdaq Breadth: 77% Upside Volume
Total Breadth: 74% Upside Volume
NYSE Advance/Decline: 67% Advance
Nasdaq Advance/Decline: 65% Advance
Total Advance/Decline: 71% Advance
NYSE New Highs/New Lows: 181 / 32
Nasdaq New Highs/New Lows: 223 / 48
NYSE TRIN: 1.33
Nasdaq TRIN: 0.53

Weekly Breadth Data 📈

NYSE Breadth: 56% Upside Volume
Nasdaq Breadth: 62% Upside Volume
Total Breadth: 59% Upside Volume
NYSE Advance/Decline: 68% Advance
Nasdaq Advance/Decline: 66% Advance
Total Advance/Decline: 77% Advance
NYSE New Highs/New Lows: 582 / 68
Nasdaq New Highs/New Lows: 753 / 206
NYSE TRIN: 1.29
Nasdaq TRIN: 0.60

MTS Levels:

How to read/use the MrTopStep Levels

Room Summaries:

Polaris Trading Group Summary Friday, November 29, 2024

The trading day was marked by precise execution of the day’s strategy, insightful education, and solid teamwork under PTGDavid’s guidance. Below is a summary of the day’s highlights:

Morning Session:

Preparation and Opening Trades:
- The session began with resources and links for trading tools and the day’s strategy. Key levels, including the “Line in the Sand” (LIS) at 6025, were identified early.
- PTGDavid entered CL Opening Long, hitting the first target promptly, and followed with an NQ Opening Range Long.
Educational Insights:
- PTGDavid emphasized the importance of writing or verbally recording a game plan to align with the Dominant Force.
- Discussions included using probability thinking and patiently waiting for pullbacks, fostering disciplined trading.

Trade Execution and Key Lessons:

Bullish Momentum:
- The Bull Scenario played out exceptionally, with NQ hitting its target at 20960 and the main market reaching the 6045–6050 zone, as predicted in the DTS briefing.
- PTGDavid shared strategies for trade entry and management using the A4 system, illustrated by detailed examples and charts.
Key Lesson of the Day:
- A critical concept highlighted was to “ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE,” which was reinforced through live trade examples.

Highlights of Successful Trades:

Precision Trading:
- Targets were achieved with exceptional accuracy. Notably, the 6050 target was hit “to the tick.”
- Calvin shared a win, stepping away from his computer and returning to find his TP at 48 hit, showcasing confidence in the setup.
Educational Charts:
- Several charts were shared to demonstrate effective trade setups, including AR4 “Flip Out” for final exits.

Community Engagement:

Room participants actively engaged in discussions, asking questions about risk-to-reward ratios, trade management, and blending strategies. The collaborative environment fostered learning and mutual support.

Closing Notes:

As the shortened session concluded, PTGDavid summarized the day’s success, noting the bullish bias remained intact and the potential for a new ATH. He encouraged participants to review the day’s trades and lessons.
The day ended with positive camaraderie as participants wished each other a great weekend.

Key Takeaways:

Follow the Plan: Writing a detailed game plan and adhering to it is vital for consistent trading success.
Patience and Discipline: Waiting for pullbacks and aligning with the dominant force can lead to high-probability trades.
Precise Execution: PTGDavid’s live demonstrations highlighted the importance of setting realistic targets and managing trades effectively.

The trading room wrapped up November on a high note, leaving participants prepared and motivated for December trading.

DTG Room Preview – December 2, 2024

Market Update & Key Focus Areas

The S&P 500 and Dow Jones closed November 2024 at all-time highs, with the S&P 500 marking over 50 all-time highs this year. Last week saw a 1% gain in the S&P and a 2% rise in the Dow.

Key Events & Market Drivers This Week:
1. Economic Data:
  - Focus on Friday’s Job Report.
  - Key releases include Manufacturing and Services PMIs, Job Openings, Weekly Unemployment Claims.
2. Federal Reserve Activity:
  - Fed Chair Powell to participate in a NYT summit Wednesday.
  - FedWatch indicates a 65% chance of a December rate cut, with limited rate cuts priced for 2025.
3. Geopolitical Developments:
  - The US dollar strengthened as President-elect Trump shifted stance on a weaker dollar, pressing BRICS countries to commit to the US dollar.
  - Political turmoil in France looms, with bond premiums rising amid budget disputes that could trigger a no-confidence vote.
4. US-China Tech Tensions:
  - The US will restrict exports to 140 companies, including semiconductor giants and chip toolmakers like Lam Research, KLA, and ASML. China plans retaliatory measures.
5. Corporate Earnings:
  - Earnings to watch: Salesforce (CRM), Okta (OKTA), Lululemon (LULU), with Zscaler (ZS) reporting after hours.
Market Dynamics:
- Volatility eased during the holiday-shortened session, with the ES 5-day trading range at 54 points.
- Light overnight trading volume suggests no whale bias, with a trendline setup indicating both bullish and bearish opportunities in the ES market.
Technical Levels to Watch:
- Resistance: 6085/87, 6127/32
- Support: 5981/86, 5866/71
Expect measured market activity amidst a light calendar early in the week, transitioning to higher volatility as major events unfold.

ES Week vs. Week

Full Year In Review looking back 13 months.
We stay in a bullish uptrend favoring buying pullbacks.

Price made a new contract high at 6060 during Friday’s abbreviated session. That price needs to be confirmed in a full trading market so we watch that line to the topside for today. For the downside, we are watching 6015 and then 6000 for the hold.

NQ Week vs. Week

Full 13-month review of NQ’s journey.

NQ has still not made new contracts high, which sits at 21340.75. That is possible in the next week or so.
During the shortened week, NQ put in a print at 21017.50 on Friday’s early close. We are close to validating that already pre-open. Watching 20890 and 20820 for hold areas on the downside and to the upside, 21081.