The dollar and bonds are making big moves, too.

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Our View

After a great start to the year, James Bullard & Co. has made it very clear that the trajectory is for higher interest rates. After some strong economic reports, strong consumer spending and stubborn CPI increases continue to pressure the Fed’s stance for higher rates. 

As I have always said, “no one knows for sure what the S&P is going to do next,” but what I can say is, it really feels like things are starting to play catch-up with the indices. 

Investors continue to pull money out of their stock accounts and according to JPMorgan, institutional clients found that roughly one-third plan to increase their exposure to stocks, close to record lows and off recently higher levels. What I see is the same thing I have been talking about for months: Dead-cat bounces that suck the public into thinking everything is OK. 

Was yesterday’s letdown the beginning of the next move down? It very well could be. The VIX rallied 10%, the dollar is pushing higher and Treasury yields traded at the highest level of the year (again). US consumer debt has risen to almost $17 trillion dollars. Debt delinquencies rose in all categories — credit cards, student loans, home loans, etc.  

This is more than the entire GDP combined of Japan, Germany, France, the UK, India, Italy, and Canada, But is that enough to put the bears back in the driver’s seat? 

I guess it could be, but it won’t go down without some rallies. Remember, it takes some time to turn around an aircraft carrier and this ship had been heading higher until recently. 

Our Lean

Yesterday, not far off the highs of the day, I asked my forum if there could be some type of ‘walk away’ selloff late in the day. This isn’t just the Bullard headlines, this also has something to do with my 3 parts to the day (write this down): What happens on Globex, what happens after the 9:30 open, and what happens in the final hour. 

It was a painful letdown. After making back a good share of the losses during the day, the bulls got exactly what they didn’t want to see — a late-day breakdown through support at the 4100. 

Our Lean: It’s not impossible that the ES trades 4050 today and bounces, but if the ES gaps sharply lower, my lean will be to buy the early weakness and sell the rallies. There is $1.8 trillion in options expiring today and the Stock Trader’s Almanac has positive stats for both the ES and NQ. However, the options squeeze won’t start until late in the day — if there is one.    

MiM and Daily Recap

The ES traded down to 4105.25 on Globex just before and opened Thursday’s regular session at traded4102.00. After the open the ES sold off down to 4098.25, traded up to 4113.75, sold off down to a higher low at 4100.00 at 10:02, and then traded up to 4135.00 at 11:05. After the high the sold off just above the vwap at 4124.00 and then traded up to a new high at 4136.75 at 11:50, pulled back to the vwap again at 4125.00 at 12:21 and quickly rallied back up to a new high at 4145.50 12:46.  The ES sold off down to 4129.50 at 1:30 and popped back up to 4145.50 at 2:35 from there it began new leg to the downside to new lows for today at 4097.25 at the 4 o’clock close and settled at 4099.75. The ES traded 4107.25 as the 3:50 cash imbalance flipped from $44 million to buy to $479 million to sell and traded 4099.75 on the 4:00 cash close. After 4:00 the ES 4100.00 and traded to need lows of 4095.00 and settled at 4095.75 on the 5:00 futures close, down x points or -% on the day.

In the end, it doesn’t take an algo to tell you how this works, the ES sells off on Globex and then on the day session and rallies. Why? because everyone is offside and not paying attention to the range because they are crap shooting for something larger. In terms of the ES’s overall tone, it’s range bound. In terms of the ESs coverall trade, volume was steady at 1 million contracts traded.

Technical Edge

  • NYSE Breadth: 70% Upside Volume
  • Advance/Decline: 72% Advance 
  • VIX: ~$20.75

Yesterday we said, “there are multiple catalysts for both the bulls and the bears,” but Bullard made sure the bears could make a stance. Now, the S&P is struggling with some major levels. 

The ES couldn’t reclaim 4175 to 4185 and wavered at major resistance. The SPY and SPX couldn’t hold $410/4100 — the Q4 high — and are rotating lower. 

Now for all three assets, last week’s low looms large. A gap-down open is likely on tap, which has me looking to buy the dip for a trade. 

S&P 500 — ES 

The ES is cracking the 21-day sma and pressing into last week’s low. Keep a close eye around 4060 — last week’s low. That could prove to be a key pivot on Friday. 

Can we test/crack this level and reclaim it for a bounce? 

On the upside, 4095 to 4100 is key. It marks the Globex high, yesterday’s low and the 21-day sma. If it can be reclaimed, it’s a big win for the bulls. Otherwise, “risk-off” may be the takeaway. 

As for the weekly: 

Look at those major rejections at 4175, my goodness! On the larger timeframe, I can’t help but notice the 4025-ish area, as the 10-week and 50-week moving averages converge with uptrend support. 

That zone should be good for a bounce, if we see it in the next few days. 


Like Danny said, I’m looking at today’s gap-down as a potential opportunity, leaning into it as an opportunity to buy vs. sell. 

That’s with the 21-sma in play, as well as last week’s low near $405. 

Remember yesterday we said things could get sloppy below the $410 to $409 area. Well, this is sloppy. 

Look to see if buyers step in near the open for a trade. Otherwise, let’s see how the S&P trades Friday (Opex day) and sets up for next week. 

Dollar — DXY

Daily/weekly chart above of the DXY, which has been rallying hard off the lows and as outlined yesterday, is a negative for equities. 

It’s above downtrend resistance — the 50-day and 10-week moving averages — but into a key pivot area. Not a trade but keep an eye on the dollar. A sustained up-move creates a problem for the bulls. 

Bonds — TLT 

The rising 10-year yield has also created a problem for equities, but the TLT is coming into a key gap-fill area, the 50% retracement, the January low and the $100 area. 

Aggressive bond bulls can be buyers in this zone with a stop near $98. 

Non-traders can simply keep an eye on this level to see if a bid comes into bonds — and thus, stocks too. 

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 B/E or better stops.)
  • ** = previous trade setup we are stalking.
  1. NVDA — long from $210 & Trimmed ⅓ at $219+, $223+ and $230
    1. Absolute beauty thus far. Down to ¼ against a B/E or better stop. Up to you on how to manage from here
  2. AMD — trimmed down to ½ position at $85 to 86. Trim down to ⅓ if we see $87+. Stop-loss of B/E or better now
  3. **CAT — long on a weekly up rotation over $252.14. First target would be $258 to $261. Stop at $242.
  4. ** NG — looking for a move over $2.65. For UNG, over $8.92. 

Go-To Watchlist

*Feel free to build your own trades off these relative strength leaders*

Relative strength leaders →

  1. AQUA
  2. AEHR
  3. GE
  • SBUX
  • MELI 
  • NFLX
  • AXP
  • BA & Airlines — AAL, DAL, UAL
  • CAT
  • HCCI
  • XLE — XOM, CVX, COP, BP, EOG, PXD — (Weekly Charts)

Economic Calendar

As we all know, there’s no crystal ball when it comes to trading stocks, options, or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk-free for 30 days.
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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