on April 8, 2024

“Everything Is Moving”

What is the Fed going to do?

MrTopStep and @HandelStats have come up with a one-time limited offer for a combined room, where you will get all the MTS tools and a very extensive amount of insights and resources designed to elevate your trading game.

This combined offer is packed with tools, resources, and direct access to expert insights, all tailored to help you navigate the markets more effectively and make informed trading decisions. Whether you’re looking to deepen your market knowledge or enhance your trading strategies, this comprehensive package offers a wealth of information and support to help you achieve your trading goals.

Don’t miss out on this exceptional offer to elevate your trading to the next level. With only 20 spots available at this special price, ensure you secure your place in this combined room to leverage the full potential of the TraderPro Service and the expertise of MrTopStep and @HandelStats.

Limited Spaces Remain!

Our View

Remember how I keep saying ‘everything’ is moving? I have been trying to explain the changes I have been seeing, but this story does a great job touching on everything.

On the geopolitical front, let’s face it: Things are not going well around the globe. Iran warned the US not to assist the Israelis when they strike back for the airstrike that hit the Iranian Embassy Compound in Syria. One-on-one the US would win a war with Iran, and more than likely Israel could take care of Hezbollah but the cost would be high with the US already providing arms to Ukraine, Israel, Philippines, and Taiwan.

Currently, the US is doing a joint military drill with Australia, Japan, and the Philippines. The planned “maritime cooperative activity” in the Philippines’ exclusive economic zone involves naval and air force units and just yesterday, the Chinese People’s Liberation Army (PLA) launched a joint naval and air combat patrol in the South China Sea in response.

Nigerian spokesperson Insa Garba Saidou put it in blunter terms: “The American bases and civilian personnel cannot stay on Nigerian soil any longer.” While all this is going on, Russia is trying to claim ownership of the Arctic Circle or part of it…

I said this years ago that the US can no longer be the global sheriff and this is just a few of our problems. I am very pro-US, but our sphere of influence has shrunk yet the US responsibilities have increased.

I say it all the time: I’m just a street kid who learned about the world on the CME floor, but this is not heading in the right direction and I can’t see how the US won’t be drawn into one or more military conflicts at once.

Our Lean

I am a proponent of buying weak closes — especially when the ES closes out at a big discount to the S&P cash. Yes, the futures rallied a little late but like everyone else, I fell prey to all the negative geopolitical news.

Like my rate-cut call, my street smarts and a little common sense said “no way.”

The Fed is stuck in a situation it can’t get out of — high rates and high inflation. I’m sorry but lower rates are not coming anytime soon and if inflation continues to rise, we all know what will happen then. I think the main thing to keep an eye on is the 10-yr notes. It used to be that you needed to follow the top 10 stocks — now its rate, oil, gold, and oil.

There are a lot of moving parts and as I mentioned, it’s extremely fluid. Ordinarily, I would not list all the economic reports, but this week we get another look at CPI and PPI, 9 Federal Reserve speakers, the Fed minutes, and Q1 earnings start this week with the banks on Friday.

When you add it all up and the recent uptick in inflation, it’s a high level of risk.

Our Lean: Sell the rips. That does not mean I won’t buy a falling knife or two, but I think it’s time to be careful. After a big rally on Friday and over 1.8 million in volume, anything can happen — and will.

MiM and Daily Recap

ES Recap

The ES traded up to 5219.50 on Globex and then sold off down to 5195.50 after the March nonfarm payrolls increased 303,000 for the month, well above estimates for an increase of 214,000 and higher than the downwardly revised 270,000 gain in February. After the low, the ES rallied up to 5224.50 at 8:46 and opened Friday’s regular session at 5212.00.

After the open, the ES traded down to 5206.75, rallied up to 5219.99, sold off down to a higher low at 5207.25 at 9:40, and then rallied up to 5222.25, pulled back to 5217.00 and then rallied up to 5231.25. From there, the ES pulled back to another lower high at 5216.75 at 10:07, rallied back up to the 5231.25 high and then sold off down to just above the VWAP to 5215.50 at 10:28 and then rallied 33 points up to 5248.50 at 10:55. After the high, the ES sold back off down to 5331.25 at 11:17, rallied up to 5247.24, traded 5243.00 at 11:37 and then rallied up to and then made four consecutive new highs at 52.59.75 at 11:47, 5265.5 at 12:10, 5266.50 at 12:20 and then up to a 5268.25 double top at 12:25.

After the high, the ES pulled back to the 5261.50 level and for the next 24 minutes back-and-filled and rallied up to the high of the day at 5272.50 at 1:01, then sold off down to 5255, rallied back up to 5263.75 at 1:38 and then traded down to 5327.00 at 2:01. After the low, the ES rallied up to a lower high at 5261.00, sold off down to 5245.50, and rallied up to 5255.25 at 2:14. The ES fell into a slow grind down to the 5240.00 level at 2:47, traded back up to 5252 at 3:16, pulled back to 5246 and then shot up to 5258.75 at 3:35, then sold off down to 5248.75 at 3:43. The ES traded 5252.50 as the 3:50 cash imbalance showed $989 million to buy, rallied up to 5260.75 at 3:56 and traded 5251.25 on the 4:00 cash close. After 4:00, the ES pulled back to the 5259 level, and rallied to 5256 on the 5:00 futures close, up 55.75 points or 1.07% on the day.

In the end, it was down the staircase on Thursday and up the staircase on Friday. In terms of the ES’s overall tone, it was like night and day. In terms of the ES’s overall trade, volume was higher but both the selloff and rally were not in line with historical volumes for large percentage moves: 396k Globex and 1.454 million traded on the day session for a total of 1.8 million contracts traded.