Can the Bulls String Together a Few Wins?
The monthly jobs report is on tap tomorrow.
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Our View
I had the right idea yesterday and I laid it out in the Lean, but I traded it horribly. Our Lean was to “Sell the early rallies and buy the pullbacks — especially if the bonds hold.”
I knew to sell the early rallies, but when the S&P came down I started buying it and I was too early. I blame it on myself, but I tossed and turned all night and just didn’t have it early and when I came back after lunch, I started buying both the ES and NQ.
Again though, I was too early and didn’t have a position on when they finally took off. Sometimes, this is how trading goes. This is something you just have to move on from as tomorrow is a new day.
Our Lean
We have initial jobless claims and the trade deficit number and some Fed speak today (see the full calendar at the bottom) and tomorrow is the September jobs report.
The ES got above 4300 yesterday, but closed 14 points off the high.
Our Lean — especially if we gap higher — is to sell the early rallies and buy the 30+ point pullbacks.
ES levels are down below with the chart.
MiM and Daily Recap
The ES sold off down to 4235, rallied up to 4282 and opened Wednesday’s regular session at 4269.50. After the open, the ES traded 4268, rallied to 4353, sold off down to a higher low at 4268.25 at 9:52, rallied up to 4278, and then dropped down to 4254.25 at 10:30. From there, it rallied up to 4275.25 and sold off down to 4255.75. As you can see, it was a choppy two-way trade. After the drop, the ES rallied up to 4285.75 at 11:49 and then made 4 new highs at 4288.00 at 11:56, 4289.50 at 12:00 (buy program into the half hr), 4291.00 at 12:22 and 4293.00 at 12:33.
After the last high, the ES chunked its way back down to 4265.25 at 2:25 and then climbed back up to 4280.75 at 2:54. After the low, the ES rallied up to 4296.75 at 3:18 and made new highs at 4297.00, 4298.50 and 4304.00 as the early imbalance showed small to buy. After the high, the ES pulled back to the 4297.25 area at 3:52 and traded 4294.25 as the 3:50 cash imbalance showed $2.2 billion to sell, sold off down to 4291.25 and then traded up to 4302.75 and traded 4296.25 on the 4:00 cash close. After 4:00, the ES traded down to 4290.50 and traded 4290.75 on the 5:00 futures close, up 28 points or 0.66% on the day.
In the end, it was a day filled with lots of dips and rips that ended with a rip above 4300. In terms of the ES’s overall tone, it was firm. In terms of the ES’s overall trade, volume was high again: 470k traded on Globex and 1.635 million traded for a total of 2.105 million contracts traded.
Technical Edge
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NYSE Breadth: 53% Upside Volume
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Nasdaq Breadth: 63% Upside Volume
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Advance/Decline: 60% Advance
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VIX: ~$18.50
ES
The ES rebounded alongside bonds. But it’s not out of the woods just yet.
Daily chart of the ES
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Upside: Hourly close above 4300.50 targets 4304.25, hourly close above there targets 4313.75, then 4323.25. Hourly close above there targets 1sd at 4330.94. Daily close above 4335.12 targets 4351.91 daily close above there targets 4392.66.
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Downside: Trade and hourly close below settlement targets 4272.50. Hourly close below there targets 4260.62 then 4248.75. Hourly close below there targets 4238.75 then -2sd 4219.40. More in morning review.
NQ
Daily chart of the NQ
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Upside: Trade above settlement 14912.50 targets 14944.25, then 14974.90. Trade above there targets 14995.75, hourly close above there targets 15040.88 then 1 sd at 15078.16. Hourly close above there hourly close above there targets 15095.75, then 15130.83 Daily close above there targets 15342.33.
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Downside: Trade below settlement 14912.50 targets 14835.50, then 14797.12, then -1sd at 14746.24.
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
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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