ES Hits Buy-Stops and Rides to 4800
Now what?
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Our View
It has been an interesting start to the year. After riding a nine-week win streak into 2024, the S&P 500 fell in four straight sessions and the Nasdaq fell in five.
Stocks found their footing on Friday, then enjoyed a powerful rally on Monday. As nice as the rally was, the next few actions are just noise compared to later in the week.
That’s as we get the monthly CPI report on Thursday morning, then JPM, C, WFC, BAC and others kick off earnings on Friday.
Let’s keep today short, as the focus will soon shift to those events.
Our Lean
Well, the ES did what we talked about in yesterday’s Lean…it got above 4770 and started running the buy-stops, climbing all the way up to, and slightly above, 4800.
I had a very good feel for yesterday’s rally. Here is one of the posts from the Mr Top Step chat room:
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IMPRO : Dboy : (9:36:02 AM) : going to take out 4770
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IMPRO : Dboy : (9:36:18 AM) : overdue for a rip
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IMPRO : Dboy : (10:44:17 AM) : this is a BarnBurner
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IMPRO : Dboy : (10:44:48 AM) : Try to close above 4773, then we go back to 4800
Our Lean: I don’t think the ES is done going up, but we have a trading rule in the MrTopStep Trading Rules 101 that says the ES tends to go ‘sideways to lower’ after a big up day.
I can’t rule out selling a rip, but I’m long from 4731.25 and think we are going to new highs this week. What I don’t want to do is get all bulled up and see the ES drop 30 or 40 points. Ideally, I want to buy any 20- to 30-point pullbacks. I think the Week 2 Friday options expiration is going to be big to the upside.
For those of you who like HandelStats levels, here they are:
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Upside: Trade and hourly close above 4784.50 targets 4790.38, then 4796.25. Hourly close above there targets 4800 settlement, then 4802.12. Hourly close above 4802.12 targets 4820.75, then 4824, then 1sd at 4827.81. Hourly close above there targets 4830.25 then 4835.25, 4837, 4838.75. Hourly close above there targets 2sd at 4855.63.
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(NOTHING ABOVE THERE TO STOP A MASSIVE RALLY more in morning review).
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Downside: Trade and close below 4784.50 targets -1sd at 4772.19. Hourly close below there targets 4269.62, then 4764.25 (Daily close below here would be a little negative). Hourly close below there targets 4757.88, then 4749.50, then -2 sd at 4744.37.
MiM and Daily Recap
ES recap
The ES sold off down to 4715.25 on Globex and opened Monday’s regular session at 4739.25. After the open, the ES traded 4738.00 and then quickly traded up to 4748.50 at 9:52, pulled back to the 4740.75 level, and then traded up to 4754.25 at 10:09, did a little back-and-fill off the high, then popped up to 4748.50. From there, the ES ran buy-stops up to 4762.50 at 10:54, traded down to 4754.50 at 11:18, rallied up to 4775.25 at 1:55 and then made 13 separate new highs up to 4796.00 at 2:58 as the early NYSE order imbalance showed $535 million to sell.
After a small round of back-and-fill, the ES made its 14th new high at 4800.75 at 3:43 and traded 4794.00 as the final 3:50 cash imbalance showed $2.3 billion to buy, and then traded up to 4803.25 going into the 4:00 cash close. After 4:00, the ES traded 4797.25 and settled at 4800.00 on the 5:00 cash futures close, up 62.5 points 1.32% on the day.
In the end, this goes back to the MrTopStep Trading Rules 101 that says it takes days and weeks to knock the S&P down and only one to bring it back! In terms of the ES’s overall tone, it was firm (up 1.32%) but the NQ was by far the more oversold and closed up (1.99%). In terms of the ES’s overall trade, volume was low: 204k traded on Globex and 1.094 million traded on the day session for a total of 1.253 million contracts traded.
Technical Edge
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NYSE Breadth: 64% Upside Volume
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Nasdaq Breadth: 61% Upside Volume
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Advance/Decline: 75% Advance
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VIX: ~13.50
ES
Levels from HandelStats.com
ES Daily
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Upside: Trade and hourly close above 4784.50 targets 4790.38, then 4796.25. Hourly close above there targets 4800 settlement, then 4802.12. Hourly close above 4802.12 targets 4820.75, then 4824, then 1sd at 4827.81. Hourly close above there targets 4830.25 then 4835.25, 4837, 4838.75. Hourly close above there targets 2sd at 4855.63.
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(NOTHING ABOVE THERE TO STOP A MASSIVE RALLY more in morning review).
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Downside: Trade and close below 4784.50 targets -1sd at 4772.19. Hourly close below there targets 4269.62, then 4764.25 (Daily close below here would be a little negative). Hourly close below there targets 4757.88, then 4749.50, then -2 sd at 4744.37.
NQ
NQ Daily
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Upside: Trade and hourly close above 16484.75 targets 16495.62, then 16519.25, then 16549, hourly close above there targets 16607, then 1sd at 16610.50. Hourly close above there targets 16621.75, then 16652.12, then 16695, hourly close above there targets 2sd at 16753.76
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Downside: Trade and hourly below 16448.25 targets 16392.25, then 16366.12, hourly close below there targets -1sd at 16324. Hourly close below there targets 16289.75, then 16263. Hourly close below there targets 16197, then -2 sd at 16180.74.
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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