Early Edition: September Jobs Numbers Preview

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Our View

I was right about seeing more headlines, and guess what? There are going to be more and more! This rip/dip/algo blip price action is rough stuff. While courageous traders may want to buy the dips right now, I think there is a lot of risk, with the main one being Israel preparing to counterattack Iran. Iran has responded by saying it would start a regional war.

Look, I want to say something—things are changing more than we know. I remember when COVID-19 broke out, I bought a big freezer, stuck it in the garage, went to Costco, and loaded it up. But we don’t have to worry about that now because the port strike has been put off until January 15th. But that just puts off one problem among many.

MiM and Daily Recap

Port Strike Suspended Until January 15th

The ES traded down to 5726.50 and up to 5759.25 on Globex at 8:35 a.m. on Thursday morning and opened the regular session at 5769.50. After the open, the ES rallied up to 5748.25 and then sold off down to a high or low of 5742.75, rallied 10.25 points up to 5753.00, and sold off 13.75 points down to a new low at 5739.25 at 10:53 a.m. Then it rallied 30.75 points up to 5770.00. After the high, a headline hit saying President Biden suggested that U.S. officials are considering whether to support an Israeli strike on Iranian oil facilities. The ES sold off 36.5 points down to 5733.50 and then rallied 30 points up to 5763.50 at 12:24 p.m. It then sold off 37.75 points down to a new low of the day at 5725.75 at 1:06 p.m., which was 37.75 points off the high.

After the low, the ES rallied 19.75 points up to 5745.50 at 1:45 p.m., rallied another 14 points up to 5745.50, then dropped 10 points down to 5735.50, and rallied up to 5744.00 at 2:45 p.m. After the rally, the ES sold 12.75 points down to a higher low at 5731.25 at 3:12 p.m., rallied up to 5739.50 at 3:42 p.m., dropped down to 5733.75, and rallied to 5735.00 at 3:43 p.m. It traded at 5742.50 as the 3:50 cash imbalance showed $1 billion to buy, and traded at 5750.00 on the 4:00 p.m. cash close. After 4:00 p.m., the ES dropped 6.25 points down to 5748.00 at 4:01 p.m., popped back up to a 5754.25 double top, dropped down to 5748.25 at 4:11 p.m., rallied up to 5752.00 at 4:57 p.m., and settled at 5744.00, down 16.25 points or -0.28%.

The NQ settled at 15,958.25, down 51 points or -0.26%. The YM settled down 0.50% and the RTY closed down 0.78%. The takeaway is that the big caps fared better.

In the end, the markets remained on edge. In terms of the ES’s overall tone, it could not hold any of the rallies until 3:30. In terms of the ES’s overall trade, volume was on the low side at 1.364 million contracts traded.

Technical Edge

Daily:

Weekly:

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What’s Happening in the Market

We had another choppy trading session today with an early topping signal from both of our primary HIRO instruments, which was followed by a continued pattern of more call flow exhaustion. And a tight trading range was regulated by bottoming signals from index put flows as well as local positive market gamma.

While local gamma was positive today (via TRACE), SPX closed alarmingly near its Volatility Trigger™ again, being trapped under it for much of the day, only saved by a last minute mean-reverting snap back up: SPY -0.18%, QQQ -0.07%, and IWM -0.67%.

The power of that bearish signal at the open can be measured by how steep and pronounced that peak is. And the confirmation which follows it should be communicating that any consolidating or choppy price action has a bearish advantage.

Once that confirmation ended, equities tried to bounce but a couple of call flow exhaustion waves (two waves on index flows) prevented that from happening.

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!