Earnings Pick Up Steam. So Do the Geopolitical Headlines
Can the ES bottom in October?
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Our View
It didn’t take me long to figure out I was wrong about the early direction yesterday.
I know when the ES closes weak it usually rallies on Globex, but when the ES kept going up in the morning and the shorts were getting forced out, you could see how the buyers would push the ES and NQ up and then let it fall after the buy program and then buy it again. Yes, there were a few short opportunities, but the “money trade” was for higher prices.
I have been overdoing the OP and I’m going to try and cut back this week. We all know that there is a tendency to make a low in October, but we also know the real war in Gaza has not started yet.
Separately, remember that earnings are beginning in earnest this week, while we get the September retail sales number this morning.
Our Lean
I have always said I’m a bull market guy and that if the ES is going up I want to go for the ride, but I just don’t like the geopolitical environment. It creates a very fluid situation that can change in a second.
Our Lean: The Gaza headlines should start to pick up today. Sell the early rallies and buy the 30 to 40-point pullbacks keeping in mind the headline risk. There’s an ES wall at 4412-4420.
As for levels, @Handelstats says:
Upside: A Trade above 4392 targets 4395.75. Trade and hourly close above there targets 4:15 settlement at 4405.25. Trade and hourly close above there targets 4412.48, then 4427, then 1 sd at 4438.48. Hourly close above there targets 4460.50, then 4467.89, then 2 sd at 4471.
Downside: Trade and Hourly close below 4385 targets 4381.25, then -1 sd at 4372. Trade below there targets 4366.75, then -2 sd at 4338.80.
MiM and Daily Recap
ES Recap 15-min
The ES traded up to 4383.75 on Globex and opened Monday’s regular session at 4380.25. After the open, the ES traded 4377.75 and then quickly rallied up to 4390.00, then fell into a 4479 to 4387.50 range, back-and-filling until the ES rallied 11 points up to a new high of 4393.50 at 10:13. After a small pullback, the ES rallied up to 4397.00 at 10:19 and then up to 4310.50 at 10:33. After 15 minutes of back-and-fill, the ES traded up to 4414.25 at 11:01, dropped down to 4397.50 and then back-and-filled from the 4493.50 level to 4405.00 from 12:00 to 12:59 when the ES rallied 11.5 points up to 4411.25 at 1:16 and dropped ~26 points down to 4385.50 at 1:57 after a headline hit saying, “U.S. Defense Officials Confirm 2,500 Marines Are En Route to Israel-Gaza-Lebanon Region.”
After the low, the ES rallied back up to 4410.00, pulled back to the 4398.50 level and rallied up to 4412.25 at 3:31 as the early imbalance showed $331 million to sell and traded down to 4404.75 at 3:46. The ES traded 4404 as the 3:50 cash imbalance showed $657 million to sell, traded 4409.25 and then traded down to 4399.50 on the 4:00 cash close. After 4:00, the ES rallied and settled at 4406 on the futures close, up 4375 points of 1.00% on the day.
In the end, the ES rallied on Globex and then rallied on the day session. In terms of the ES’s overall tone, it was firm but most of the buying was short-covering. In terms of the ES’s overall trade, volume was lower: 274k traded on Globex and 1.351 million traded on the day session for a total of 1.625 million contracts traded.
Technical Edge
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NYSE Breadth: 85% Upside Volume (!)
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Nasdaq Breadth: 69% Upside Volume
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Advance/Decline: 74% Advance
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VIX: ~$17.75
Levels from HandelStats
ES Daily
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Upside: A Trade above 4392 targets 4395.75. Trade and hourly close above there targets 4:15 settlement at 4405.25. Trade and hourly close above there targets 4412.48, then 4427, then 1 sd at 4438.48. Hourly close above there targets 4460.50, then 4467.89, then 2 sd at 4471.
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Downside: Trade and Hourly close below 4385 targets 4381.25, then -1 sd at 4372. Trade below there targets 4366.75, then -2 sd at 4338.80.
NQ
NQ Daily
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Upside: Trade above 15247.50 targets 15274.50. Trade above there targets 4:15 Settlement at 15305. Trade and hourly close above there targets 15328, then 15376.62. Above there targets 15435.50, then 1 sd at 15460.73. Hourly close above there targets 15541.35.
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(DAILY/WEEKLY CLOSE ABOVE HERE TARGETS MUCH HIGHER). Hourly close above there targets 2 sd at 15616.47.
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Downside: Trade and hourly close below 15218.8 targets -1 sd at 15149.27. Trade and hourly close below there targets 15093.7, then -2 sd at 14993.53.
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 break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
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JPM — Many are long from $143-145. This is a longer term swing. Trimmed $153s, then $157.50+ on 7/24.
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Down to ½ position vs. Break-even stop. Can make small, ~10% position trim if we see $160+
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If worried about a larger correction, can sell/trim north of $150. Below entry and no need to stick around in JPM.
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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!
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