Nasdaq-Dow Rotation: Billions in Motion and Market Trends

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The sell YM, buy NQ rotation has been one of the largest rotations I’ve seen since last summer. Yesterday, the NQ surged 1.6% to a new record high, while the YM dropped to new lows. To get a clearer picture of this rotation, I asked @HandleStats to break down the numbers, and it’s quite amazing.

November Market Recap & December Trends

S&P 500 E-mini Futures (ESZ):

Nasdaq 100 E-mini Futures (NQZ):

Dow Jones E-mini Futures (YMZ):

In a major development, Nvidia (NVDA) officially joined the Dow Jones Index on November 4, 2024, marking a significant milestone for the tech giant.

Nvidia (NVDA):

Basically, the ES has been the odd man out in December, while billions are moving between the Nasdaq and Dow. How long will this last? I don’t know, but had I bought the NQ versus the ES, the numbers speak for themselves.

Bitcoin is up to 1007, yields are down, and oil fell -0.80%. This all seems to be part of the Fed “painting the tape” ahead of the expected rate cut on Wednesday.

Our lean is to buy the pullbacks. I can’t rule out selling a rip, but with all the back-and-fill action, I still believe there is upside.

I never knew when I walked on the CBOT that my journey would lead me to build the largest S&P 500 futures and options desk on the CME, nor did I know I would have to fight the floor gangs, or what they called broker groups. I was a young Irish scrapper that could not show fear. If there were 4,000 people on the floor, at least 40% of them worked for the groups, and the other 60% loathed these groups. If they spoke out against the brokers, they would not trade with the independent traders; they would literally get shut out. For years, perfectly honest seat owners and traders sat by while the crooks got the cream of the crop trades, while the rest of the pit got the scraps.

I wonder how many thousands of honest, talented traders never made it because of the criminal element that existed? They ran the membership department, the pits were overseen by a pit committee, and the president of the exchange was Jack Sandor, who was partners with the head of ABS broker group, one of the largest broker groups on the floor. When I would get a big new account, the desk phone would ring, and it was Jimmy Kaluentis or his secretary demanding I go to his office to force me to give them the business. I could have taken kickbacks, but I knew that would compromise the trading desk.

When the guy I worked for sent me to the CME, I had been warned, but not in a million years would I have known the level of corruption. It didn’t take long for me to see that the guys at the desk were complicit. Buy 100 ESU (50k a point), and the pit is showing 350.10 bid at 350.20, and the clerk in the pit is yelling, ‘50 lots offered at 20.’ I say, “Buy 100 up to 350.30!” An honest broker would fill the order, but they were far and few between. Instead, the order would get filled up to 350.50, with most of the contracts filled on the high ticks, costing the account uncountable amounts of money.

I remember when Paul Tudor Jones called me at the desk and said he was in town and wanted to meet at Lake Point Tower. The broker Jimmy Place, or AACW, was all excited and picked me up in his limo, and off we went to LPT. After we got there, Paul asked me how I was, and then turned around and said, “Jimmy, please come over here with the several charts and time and sales.” I knew what was coming: all the front-running on the Tudor orders, and it was absolutely despicable. Millions and millions of dollars stolen, and most of it through one broker—I’ll call him MA. Every 300 and 500 lot cost millions in slippage. I knew MA was doing that, but not to that degree. I felt embarrassed and ashamed. After we left, Jimmy asked me if I thought Paul would use the desk again. I remember chuckling, and he got pissed and said, “Answer the question.” I said, “Jimmy, I don’t need to answer the question. Would you?”

Before the open, I called Paul on his cell phone, and he picked up. He said, “What can I do for you, Danny? What can I do for you?” I told him how bad I felt and that I was resigning at the end of the day. He already knew about my run-ins with the broker groups, and he said, “Danny, I don’t blame you. I have heard too many stories about you fighting the brokers.” That was in 1987, and within weeks, I started my own desk. From that moment on, I was attacked at my desk, threatened, told not to take my family on my boat, and warned to watch out for a gas can through my front window. And you know what? It only made me tougher, more pissed, and more determined.

The shake-downs went on for years; they never stopped. Even the compliance department would charge me for things I didn’t do. One investigation went on for years, that I front-ran an order for the PitBull hedge fund. They went through all of his accounts, searched up and down, and found nothing.

To me, it didn’t matter if it was a 1 lot, a 10 lot or a 200 lot, it was someone’s money, and if I had to do it all over again I would not change a thing.

MiM and Daily Recap

Technical Edge

Market Levels:

Room Summaries

Polaris Trading Group Summary – Monday, December 16 2024

Morning Session:

Key Trades and Insights:

Afternoon Session:

End-of-Day Notes:

Key Lessons Learned:

A strong trading day overall, with several profitable opportunities and clear technical alignment. Well done!

Economic Calendar

Important Recent and Upcoming Events

Earnings Today:

Full 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!