End-of-Quarter Walkaway is a possibility today.
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Our View
I want to thank everyone for being a part of MrTopStep and the Opening Print. I know my writing and market views are not always perfect, but who is? If someone had something that made money every day we would never hear about it and if we did, it would blow up when we started using it.
I’ve now been writing the OP for 28 years and some of you have been with me nearly that long. That means more than I can truly express. As for the newcomers, I’m just as pleased to have you onboard as well.
2022 was a grind of endless rips and large dips and I think we have to be prepared for more of the same in 2023. The PitBull is talking about 6-month T-bills and collecting 4.5% — that doesn’t sound so bad. I do think as the Fed rate hikes stall, the S&P will start to go back up. However, there will continue to be economic and geopolitical problems over the next few quarters. I think the best approach in 2023 is to be very patient.
There is a whole new 365 days in front of us. Take some lessons from this year with you and if you had a tough year, wipe the slate clean and focus on your mental capital too. Be safe all and Happy New Year.
6 Predictions
On the last trading day of 2021, I wrote six predictions for 2022.
Of course, I didn’t know this type of action was going to play out, but I do think I was one of the only people calling for a 15%+ correction in the S&P 500 as it was trading at all-time highs.
I like doing these predictions and I have some fun with them. They may pan out and they may not, but here’s what I’m looking for in 2023:
- Crude oil takes out the 2022 high and possibly trades up to $150+
- Gold breaks out and trades $2,500 to $2,800
- S&P 500 falls ~20% and then rallies ~20%
- Dollar gets pounded.
- My wild card: Bitcoin falls below $10K — possibly as low as $5K to $8K — and then finishes the year between $35K to $40K
Our Lean — Danny’s Take
Before yesterday’s MIM imbalance, I reminded the MrTopStep forum of a very old MrTopStep trading rule called, “The Walk Away.” That is:
On the last day of the quarter, funds tend to make their moves early and quite literally “walk away.” So by 11-12:00 ET, the S&P is susceptible to a decline through the afternoon. Traders look to set up a short position in the early to mid-afternoon, as the professional money managers walk away, leaving the equities susceptible for an afternoon fade.
Our Lean: I came into today looking to play the Walk Away Trade. Well, the market doesn’t seem to be waiting for Wall Street’s lunchtime, as the Walk Away Trade seems to already be underway. The odds of the ES closing firm today are low.
As for the last trading day, Our Lean is to be a spectator. I prefer to start thinking about next week and the first jobs number of 2022. Not every day needs to be a trading day.
Note/Bonus: I am giving $1,000 away to anyone who can pick where the ES will settle on the 5:00 ET futures close. Reply to this tweet with your guess by noon ET!
MiM and Daily Recap
Like many days recently after the ES closed weak, it rallied on Globex, climbing to 3839.50 and opened Thursday’s regular session at 3834.75. This time though, they didn’t sell the overnight rally as the ES scorched up to 3881.50 at 11:54. The ES slowly pulled back to the 3871 level and rallied up to a new high at 3882.75 at 2:08.
The ES pulled back to the 3870.50 level at 3:24 and then fell into a small back-and-fill pattern. The ES traded 3877 as the 3:50 cash imbalance showed $829 million to buy and then sold off down to 3872 on the 4:00 cash close. The ES settled at 3869 on the 5:00 futures close, up 64 points or 1.7% on the day.
In the end, all I can say is the rally was overdue. In terms of the ES’s overall trade, it was all buy programs and buy stops. In terms of the ES overall trade, volume was low at 1.09 million contracts traded.
Technical Edge
- NYSE Breadth: 90% Upside Volume — (!!)
- Advance/Decline: 84% Advance
- VIX: ~$22
S&P 500 — ES
Odds are high for a bit of “fuckery” in the ES today. Holiday-like volume combined with end-of-quarter and end-of-year shenanigans and it’s no wonder many traders check the open and then get an early start on the long weekend.
The ES is coming in under pressure as it remains pinned below active resistance via the declining 10-day moving average.
On the downside, 3835 to 3844 is the 50% to 61.8% retrace zone of yesterday’s range. If short from yesterday’s close, consider a trim into that area.
If this area can’t buoy the ES, then the 3805 to 3810 zone could be in play. Below that puts last week’s low in play at 3788.
On the upside, 3862 to 3867 is my first area of resistance. Above that and 3880 is back in play.
SPY
The SPY ran right into the declining 10-day moving average yesterday, its first test of active resistance in 10 days. To me, that’s a short. If wrong, we’ll know quickly and can cut our losses and move on.
If right, we’ll be able to trim ⅓ and move to a B/E stop.
On the downside, watch $381. A break of this level and failure to regain it puts Thursday’s low in play, at $379.08. Below that and the SPY could press into the $375 to $376.50 area.
DIA
Struggling with a few moving averages here, the DIA has been the leader of the “big 4.”
Keep an eye on $330, roughly yesterday’s low. A daily-down rotation from here opens the door back down to the $326 area and the 200-day moving average.
On the upside, there’s too much selling pressure in the $333 to $334 area. Clearing it and the 21-day could put $340+ in play, but that doesn’t appear to be a high-probability setup at this time.
CAH
One of the bull leaders this year, even as CAH struggles with $81. CAH is now pulling back into the 50-day and 10-week moving averages, as well as the 50% retracement and recent support.
There is an open gap down at $76.70, so we could see a bit more pressure.
This one has been a slow mover and I’d love a tight inside day here to get us a cleaner setup. More aggressive bulls could take a half-size position on this dip though, and look to trim in the $79s. That may be my course of action, especially if we can get $77.25 to $77.50 today.
CAH shouldn’t see sub-$75 if the bulls stay in control.
DE
Not sure when we’ll fill the $416.50 gap, but I’d love to see it happen while the 10-week and 50-day moving averages are in play.
Keep this DE setup in mind if we see it today or early next week.
Open Positions —
- Numbered are the trades that are open.
- Bold are the trades with recent updates.
- Italics show means the trade is closed.
- UUP — Ideally needed a close back over last week’s high of $27.95 and we closed AT $27.95. Long against $27.75 is fine with a ¼ to ⅓ trim at $28.15 to $28.25. Ideally looking for $28.40+
- TLT — Slow start but we’ll see. I will feel better about TLT if it can clear and hold $101.10.
- For now I’m using $98 as my stop. On the upside, can consider a small trim at ~$102, but really I’m fishing for $103.40 and the declining 10-day.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
- SBUX — nicely weekly-up setup after 10-week ema reset.
- DE — gap-fill & 10-week would be attractive for potential longs
- SMCI — weekly up over $85.85
- HON — weekly
- CAH
- LNG
- LMT, RTX, NOC
- MET — weekly
- GIS
- CI
- MCD — weekly
- FSLR — $140 is the 21-week sma and retest of prior resistance
- VRTX, UNH, MRK
- XLE — XOM, CVX, COP, BP, EOG, PXD (Weekly Charts)
Economic Calendar
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