Can the ES Keep Going Up?
The S&P has regained a lot of lost ground.
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Our View
Everyone was asking why the ES and NQ rallied so much and depending on who you ask, you probably won’t get the answer that I am going to give you. I posted this on Twitter:
Yes, U.S. consumer confidence moved lower in August and home prices held steady in July, while the JOLTs data showed job openings fell in July, continuing a downward trend.
That all said, the combination of all of the above created one of the largest buy programs in several months. As I have said many times, with volumes so low and the crowd short, the algos did what they do best: Squeeze the markets higher.
The question now is, will the ES keep going up into this week’s personal-consumption expenditures price (PCE) index and the non-farm payrolls report?
I want to explain how “My Leans” are meant to work. A lean of “sell the early rallies and buy the pullbacks” is a long bias, and “buying the early weakness and selling the rallies” is a bearish bias.
One of the problems with this is a trend day. As you know, some days I just say buy weakness or sell rallies, but it’s really an odds thing; the day I go with just “buy the pullbacks” ends up a day I should have said, “sell the rallies and buy the pullbacks.”
Either way, there was a really good pullback from the early 4447.25 high at 10:31 down to the 4426.75 level at 11:08 — I am referencing Monday’s session — and there were a few 10 to 12-point selloffs, but you had to be fast on all the pullbacks because just as quick as they fell, the futures would go bid immediately.
Our Lean
Some of our old rules still work and the two that come to mind are “thin to win” and “the ES tends to rally early in the day and early in the week while in a bear market,” which I still think we are in.
That does not mean there won’t be a big end-of-year rally — I think there will — but @HandelStats did a study in July that said there would be two down months before the end of the year and a big year-end rally which I agree with. That also gels with the seasonal statistics, with August-September being the worst average two-month stretch for the market and the fourth quarter normally being pretty strong.
That said, I just don’t know which month will be down…September, October, or November?
Our Lean: Sell the early rallies — especially if the ES gaps higher on the open — and buy the pullbacks. Another rule we have is that the ES tends to go sideways to lower after a big up day, so keep that in mind.
MiM and Daily Recap
ES 15-min
The ES traded up to 4454.25 on Globex and opened Tuesday’s regular session at 4441. After the open, the ES traded 4438.50, surged up to 4482.25 at 10:37, pulled back to the 4469 level and then ripped up to 4494.25 at 11:46. After a little pullback down to 4488.75 and some back-and-fill, the ES rallied up to another new high at 4502.50 at 1:38, up 1.20% on the day, while the NQ was up 1.98%.
After the high, the ES pulled back to the 4491 area at 1:57 and stutter-stepped up to and then made five separate new highs: 4503 at 2:38, 4503.25 at 2:48, 4505.00 at 3:20, 4507.25 at 3:31 and 4509.00 at 3:47. The ES traded 4504.75 as the 3:50 cash imbalance showed $1.53 billion to buy, down-ticked to 4502 and traded 4506 on the 4:00 cash close. After 4:00, the ES rallied up to a new daily high at 4509.50 and settled at 4508.00, up 63.75 points or +1.43%, while the NQ closed up 327.50 points or 2.17% on the day.
In the end, Turn Around Tuesday showed up in force. In terms of the ES and NQ’s overall tone, they were extremely firm. In terms of the ES’s overall trade, volume was low considering the size of the move: 168k ES traded on Globex (low), and 1.173 traded on the day session for a grand total of 1.379 million contracts traded.
Some snippets from the chatroom:
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IMPRO: Dboy :(9:33:43 AM) : going up all day, buy the 10-20 point drops
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IMPRO: Dboy :(9:36:14 AM) : Turn Around Tuesday
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IMPRO: Dboy :(9:41:22 AM) : buy the pull backs
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IMPRO: Dboy :(10:13:13 AM) : es going to 4500
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IMPRO: Dboy :(10:14:33 AM) : dont sell because ur not long
Technical Edge
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NYSE Breadth: 82% Upside Volume (!)
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Nasdaq Breadth: 80% Upside Volume (!)
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Advance/Decline: 82% Advance (!)
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VIX: ~$14.50
S&P 500 — ES Futures
Bulls want to see 4485 to 4500 hold as support.
ES Daily
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Pivot: 4510-16
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Upside Levels: 4532, 4540, 4550-55, 4577
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Downside levels: 4480-85, 4460, 4440
NQ
Up 678 points in the last three days. Can it regain the 15,430 to 15,510 zone?
NQ Daily
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Pivot: 15,430
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Upside Levels: 15,550, 15,750, 15,830
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Downside levels: 15,300-330, 15,160, 15,100, 15,000-025
Guest Post
Topic: Taylor 3 Day Cycle
Author: David D Dube’ (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 3 (CD3): We’ll refer to today’s Cycle Day 3 action as “Jack-the-Ripper” as price “ripped” higher following the JOLTS report. Being the final trading day of the month, as T+2 settlement is Thursday and ahead of the long Labor Day Holiday, today was primed for a rally. Mr. Market just needed a spark to light that candle. Prior range was 76 handles on 1.374M contracts exchanged.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Having closed near highs of the day, bullish momentum may take price higher before the next decline begins. The average decline for CD1 measures 4475 which we’ll mark as pullback support. Prior session’s CALL WALL was marked at 4509. We’ll see if this level caps price in today’s session. As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4510, initially targets 4520 – 4525 zone.
Bear Scenario: Price sustains an offer below 4510, initially targets 4495 – 4490 zone.
PVA High Edge = 4509 PVA Low Edge = 4473 Prior POC = 4507
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 1 (CD1)
Thanks for reading,
PTGDavid
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 run) 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.
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM, AMZN, CVS, AMD, TLT and YM.
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JPM — Many are long from $143-145. This is a longer term swing. Trimmed $153s, then $157.50+ on 7/24.
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Down to ½ position vs. Break-even stop. Can make small, ~10% position trim if we see $160+
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If worried about a larger correction, can sell/trim north of $150 and look to re-establish lower (if we get it).
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XOM — Long from the monthly-up area at $108.50 — First ¼ or ⅓ trim is ~$112.50. Stops at $104.
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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