I think it may be time for the “Putin long” Jan /CL calls or call spread trade (remember, there’s also the micro’s available too, via /QM). I also think the grains and gold are setting up for a push higher.
While I mainly trade the ES, I have said for months that as temperatures drop in Ukraine and as Europe continues to face energy shortages, oil and gas prices can continue higher. It’s simple supply and demand.
There was that bogus OPEC report the other day that tanked crude, then oil ripped when it turned out to not be the case. Further, Germany stockpiling cash in case of outages should be a good enough reason to look at ways to be long oil in some capacity.
Putin is desperate and every time Ukraine makes a major attack, he ups the ante — which is by crippling the rest of the world with Russia’s supplies.
I expect some two-way price action today, but as the day wears on, fewer people will be online. A lot of folks take the entire week off and today will be a travel day for many, as AAA estimates 55 million travelers will travel more than 50 miles from home for Thanksgiving 2022.
AKA, a thin-to-win trade may be on the table and it’s exactly what we saw yesterday. Traders bought the early dip, then we cleared Monday’s high and it was off to the races in all of the major indices.
Our Lean: Today is the November Fed Minutes. My guess is we see higher prices, but it very well could be a sell-the-news event, at least initially. Certainly, the algos will fire up on the 2 pm headlines. In fact, it’s a very busy day on the economic calendar (see the econ section below).
Should the ES gap notably higher this morning, I may look to sell the open and buy the pullback, but the main event is at 2:00 and if you are holding longs from yesterday, just do nothing. Maybe trim into the event if the ES runs hard.
MiM and Daily Recap
Last 20 Sessions
The ES traded up to 3979.25 on Globex and opened Tuesday’s regular session at 3977.50. After the open, the ES sold off down to 3962.75 and then rallied up to 3989.50 at 10:56. From there, dropped down to 3978.25 and then rallied all the way up to 4009.50 at 3:46 as the early MIM showed $68 mil to buy. The ES traded up to 4012.50 as the 3:50 cash imbalance showed $2.7 billion to buy. The ES traded 4008.50 on the 4:00 cash close and settled at 4009.25 on the 5:00 futures close, up 51.25 points or +1.29% on the day.
In the end, it was all about the low volume and the buy-stops above. In terms of the ES’s overall tone, it was firm. In terms of the ES’s overall trade, 217,000 ES traded on Globex and 892k traded during the day session for a grand total of 1.12 million contracts traded, slightly lower than Monday’s volume.
FYI, there are only 26 sessions left in the year.
NYSE Breadth: 71% Upside Volume
Advance/Decline: 75% Advance
The market gave us a modest dip to work with yesterday, as the NQ, SPY, and QQQ gave us a “look below and fail” on the breakdown. Unfortunately, I did not buy the bullish reversal even though it was something we were looking for in the game plan. Even when you draft it up, sometimes you still miss your pitches.
Thankfully though, the markets gave us the daily-up rotation over Monday’s high. For the ES, that “put 3990 to 3994 resistance in play, then 4010+” and for the SPY it meant that “$397.66 is back in play, then $400 and last week’s high of $402.31.”
Those levels played out nicely, with the ES hitting 4012.50 and the SPY trading $400.07 yesterday.
As discussed yesterday, the markets had a strong rip and then a nice little bull flag down to active support — the line in the sand. It’s possible we fail and still go lower, but for now, bulls held active support and they remain in control. Let’s see if they can squeeze out more upside.
Keeping today simple as it’s pre-holiday and we have a full load of Open Positions that continue to do quite well, as we have trimmed at least once in 5 out of the current 6.
S&P 500 — ES
Above is a daily look at the ES. Now struggling with yesterday’s high and the 61.8% retrace, let’s see if it can hold up above 4000.
If so, and if it can remain above 4012.50, then that 4050 high from last week looks like it could act as a magnet — especially when paired with the declining 200-day moving average.
Those long from yesterday should consider a trim into the 4010 area as outlined yesterday, but they can raise their stops and fish for more upside.
A zoomed-in look is below:
On the left is a 1-hour chart (H1) and on the right is a 4-hour chart (H4).
Notice how the ES is riding the 10-ema on the left. That’s clue No. 1 to focus on early today, as it also comes into play around yesterday’s high.
If it can’t hold, the 10-ema and overnight demand zone may come into play in the 3993 to 4000 area.
SPY — Daily
Beautiful rotation yesterday. Let’s see if the SPY can maintain its bullish ways and get us a tag of last week’s high up at $402.31. Above that puts the 200-day in play, then the gap-fill up near $408.50.
On the downside, the 10-ema on the 15-min chart was active support yesterday. If we sell off on the open, I want to see this level (or the 10-ema on the 30-min chart) act as support — especially if volume breadth is clocking in at 70% or higher.
*Feel free to build your own trades off these relative strength leaders*
Numbered are the trades that are open.
Bold are the trades with recent updates.
Italics show means the trade is closed.
Open Positions — 5 of 6 we have now trimmed into profit and raised stops. A sign that the market has been much healthier overall lately.
TLT — I want to see it hold $99.50 to $100. Small trim at $103.30 (ish) for the gap-fill.
CCRN — down to ⅓ or less & raise stops. – Exit at $36+ or consider holding for $37.50 to $38
Navigating from here is up to your preference as we have hit several price targets and are up about 20% from our entry last week.
QQQ — down to ⅓ or less & B/E stop ($281). Try to trim some at $287+
DIA — Trim more at $340+ — Down to runners, if you want.
Gold — Can use a stop of $1730, as we got an excellent entry. Trim ⅓ at 1762. And ¼ to ⅓ at 1770.
UUP — Trimmed at 28.90 yesterday and looking to cover more at the $28.84 gap fill. Down to ½ or ⅔ from here. Raise stops to B/E or better.
For DXY, trimming now sub-107. Ultimately we’re looking for $106.50 or lower. Stops moved to B/E or better.
Disclaimer: Charts and analysesare 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!