by Danny Riley

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Distant Drumbeats Getting Louder

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Our View

Despite an uptick in inflation, Fed-funds futures now indicate a 72% chance of another 0.25 bps rate cut in December, up from 59% just a week ago. On the geopolitical front, tensions continue to escalate. Putin is intensifying his push into Ukraine, and South Korean President Yoon Suk Yeol has declared martial law following a failed attempt to stabilize internal unrest.

In Syria, rebel groups, led by Hayat Tahrir al-Sham (HTS), which had been confined to the northwestern Idlib province, launched their offensive last week, taking control of Aleppo and advancing south towards Hama, signalling further instability in the region.

I warned over a year ago that these conflicts would grow, with the first U.S. military engagement likely centered in the Middle East, stretching our military capabilities. The current situation seems to align with those concerns, as state planners maneuver globally—Russia asserting influence in the Middle East, North Korea remaining volatile, and ongoing conflicts in Israel further depleting U.S. military stockpiles.

I hate being gloomy, but these wars are spreading and I see no end in sight. I also anticipate a significant escalation, particularly before and after Trump takes office. For now, the markets don’t seem to care, but I think they will in 2025.

Our Lean

Not much new from the PitBull, who has a few stock holdings but is currently focused on gold and Bitcoin. The market continues to show bullish “back-and-fill” patterns. As I mentioned yesterday, if the ES jumps higher following Friday’s job numbers and Globex volume exceeds 250,000, it might present a selling opportunity. For now, the ES appears poised to climb higher.

The strategy remains to buy pullbacks around the 6080–6100–6120 levels. The market is trending upward into December’s end, but pullbacks are inevitable. I believe any 30-50 point drops should be bought.

MiM and Daily Recap

The ES traded in a tight 10-point overnight range between 6067.50–6057.50. After dipping lower just before the open, the market initially rallied back to 6062 but remained confined to a 10-point range for 40 minutes. There was a little dip to 6047.50 at 10:53 AM which, same as yesterday, proved to be the low of the regular session.

From there, the ES rallied back to the opening level by 11:30 AM, followed by a sell program that re-tested the lows and held at 11:44 AM. This set the stage for the next rally, which peaked at a new regular session high of 6063 over the following hour and 45 minutes. More slow and sideways trade finished out the day with the 3:50 PM imbalance showing $981 million to buy, prompting one final 10-point rally before the ES settled at 6066.75, up 3.75 points or +0.08%.

The NQ closed at 21,324.25, up 113.25 points or +0.5%, marking a new all-time closing high. Another similar day where the selloffs provided good buying entries, despite contracting ranges and volumes. The ES traded a total of 926K contracts, while the NQ traded 440K contracts.

In the end, it was a small dip and grind back up. In terms of the ES’s overall tone, there was little to no selling pressure. In terms of the Es’s overall trade, volume was lower at 926k contracts traded.

The ES and NQ made new highs, the yield on the 10-year note settled at 4.221%, Bitcoin prices hovered around $96,000, and Brent crude futures rose 2.5% ahead of this week’s OPEC+ meeting.

How to read the MIM

Technical Edge

MrTopStep Levels:

Fair Values for December 4, 2024:

SP: 12.64
NQ: 46.02
Dow: 97.84

VIX: 13.10 (Down)

Daily Market Recap 📊

NYSE Breadth: 42% Upside Volume
Nasdaq Breadth: 49% Upside Volume
Total Breadth: 48% Upside Volume
NYSE Advance/Decline: 39% Advances
Nasdaq Advance/Decline: 36% Advances
Total Advance/Decline: 37% Advances
NYSE New Highs/New Lows: 125 / 19
Nasdaq New Highs/New Lows: 241 / 93
NYSE TRIN: 0.72
Nasdaq TRIN: 0.62

Weekly Market 📈

NYSE Breadth: 55% Upside Volume
Nasdaq Breadth: 62% Upside Volume
Total Breadth: 59% Upside Volume
NYSE Advance/Decline: 67% Advances
Nasdaq Advance/Decline: 64% Advances
Total Advance/Decline: 66% Advances
NYSE New Highs/New Lows: 582 / 68
Nasdaq New Highs/New Lows: 753 / 206
NYSE TRIN: 0.94
Nasdaq TRIN: 0.82

Guest Posts

PTG David: Polaris Trading Group

Prior Session: Cycle Day 3

The session unfolded within the prior DTS’ range outline between 6040 – 6070.
Theme: Balancing/Consolidation with “acceptance” at the all-time high zone.
Range: 23 handles on 920k contracts exchanged.

For a more detailed recap of the trading session, click on this link: Trading Room RECAP 12.3.24.

Transition from Cycle Day 3 to Cycle Day 1:

Price Action: Price closed near the high of the day. Momentum may push price higher before the next decline unfolds.
Average Decline: Measures 6034, marked as key pivot support.

Perspective:

No reason to consider short trades until there is a structural shift in the dominant bull-bias.
Vigilance for “cracks in the bullish theme” is key, but until then: “steady as she goes!”

PTG’s Primary Directive (PD)
ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.

Scenarios for Today’s Trading

Bull Scenario:
- Price sustains a bid above 6065.
- Initial targets: 6075 – 6085 zone.
Bear Scenario:
- Price sustains an offer below 6065.
- Initial targets: 6050 – 6045 zone.

Key Levels

PVA High Edge: 6065
PVA Low Edge: 6055
Prior POC: 6064

ES (Profile)

Thanks for reading, PTGDavid

Trading Room Summaries

Polaris Trading Group Summary – Tuesday, December 3, 2024

Market Focus: Crude Oil Futures (CL) and related indices.

Morning Session:

Open Range Short Trade Success: Early in the session, PTGDavid executed a short trade based on the Crude Oil Open Range, successfully hitting the first target by 9:32 AM. This set a positive tone for the day.
Key Levels Identified:
- The 60555 LIS (Line in the Sand) was highlighted as a critical buy response level.
- Bears were noted to have control below the 6065 handle.
First Major Trade: A strong short trade with two targets met was concluded with a trailing stop around 10:17 AM, marking a “Nice trade.”

Midday Session:

IB Low and Counter-Bounce: By 10:32 AM, the Initial Balance (IB) Low was tested at 6048.75. PTGDavid accurately predicted a counter-bounce, which materialized quickly.
Two-Way Range: Consolidation within the 50-60 sandbox defined the session, with both bulls and bears defending key levels.
Look Below and Reverse: This pattern around the IB Low was emphasized as a notable opportunity, keeping the session within a balanced two-way range.

Afternoon Session:

Breakout and Testing Objectives:
- The IB High (6062) was successfully tagged by 1:04 PM, with further focus on the Prior High (PH) at 6068.50.
- Price action respected technical probabilities, moving between IB Low and High, reinforcing range consolidation.
Market Observations: Heavy institutional activity and a mean reversion setup characterized the trading environment.
End of Day Context:
- The session remained confined within the IB, signaling strong containment in price action.
- Closing notes included a $700M MOC Buy Imbalance and the NQ outperforming with highs into the close.

Positive Trades & Lessons Learned

Successful Open Range Trade: Achieving two targets early established a strong start to the session.
Counter-Bounce at IB Low: Recognizing and executing on the reversal opportunity highlighted the importance of technical patterns.
Patience in Range-Bound Market: The room focused on respecting IB boundaries and avoided overtrading in a consolidating environment.

Key Takeaway: The session was a textbook example of disciplined trading within a range-bound market. PTGDavid’s focus on technical levels and adaptability to market rhythms provided clear trade opportunities and valuable insights.

Discovery Trading Group Room Preview – December 4, 2024

Market Highlights:
- The S&P 500 and Nasdaq 100 closed at new record highs following a strong October JOLTS report showing job openings rose 372K while hires fell and quits increased to 2.1% from 1.9%.
- Federal Reserve outlook: Three Fed members signaled continued rate reductions toward a neutral policy stance. FedWatch now shows a 73% probability of a December 25-basis point rate cut (up from 62% on Monday). Chair Powell is set to speak this afternoon.
Key Market Movements:
- US Steel (X) dropped nearly 8% after President-elect Trump announced plans to block a $15 billion takeover by Japan’s Nippon Steel.
- South Korea: Political instability as President Yoon Suk Yeol imposed martial law, leading to Kospi index losses of over 1%.
- France: Political tensions rise as a no-confidence vote could destabilize the government, led by a coalition of far-right and left-wing parties.
Earnings:
- Premarket: Hormel Foods (HRL), Royal Bank of Canada (RY).
- After-hours: Synopsys (SNPS).
Economic Calendar (ET):
- 8:15 AM: ADP Employment Report.
- 9:45 AM: S&P Global Services PMI.
- 10:00 AM: ISM Services PMI, Factory Orders.
- 10:30 AM: Crude Oil Inventories.
- 2:00 PM: Fed Beige Book.
- Fed Speakers: St. Louis Fed’s Alberto Musalem (8:45 AM), Fed Chair Powell (1:45 PM).
Market Trends:
- Volatility continues to decline, with the ES 5-day average daily range dropping to 43 points.
- Whale bias is bearish ahead of the ADP employment change report.
Technical Levels (ES Futures):
- Short-term channel resistance: 6087/90.
- Intermediate channel resistance: 6130/35.
- Short-term channel support: 5988/93.
- Intermediate channel support: 5870/75.
Markets are poised for key reactions to economic data and Fed commentary later today.

ES -Week to Week

If you have remained bullish, this chart is a stairway to heaven. For more upside fun, looking for 6084.50 and then 6107.75. If there is a downside it could be swift as EOY profits get booked. Down supports at 6015.50 and then 5968.75

NQ – Week to Week

Bulls are up and over. That doesn’t mean they have to stop but some pullback should be expected in the next couple of days. For upside, looking to 21454 and then 21647.25. For the pullback(s) targeting 21261, then 21068.75 and for a roundy 21000.