Focusing on Bonds and the Mag 7 Today

Jobs report is tomorrow morning

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Our View

One of the things that has changed during the lower volumes is how easy it is for the ES and NQ to change directions, like yesterday’s open.

After two down days and a lower open, the markets made a sharp u-turn to the upside. In most cases, a rip like yesterday means a change in direction and the price action. Would the ES have jumped as much without the hot ISM number? I think it would have rallied, but it would have taken a lot more time.

With the crowd short and the news algos pressing for stops, it was just a big program up. Late in the day just before the selloff, HandelStats said if the ES sold off under 5272.00, it would break. It sold off down to 5248 and rallied back up to 5271.75 just before the 5:00 close.

What happens after every big move is, the volume dries up and the futures fall into a “dead zone” that consists of some long periods of back-and-fill chop. That ends up setting up the next move. I don’t think you see as much of this type of price action when the volume is high, so this leads me to believe that the current dead zones are where thrust / volume is rebuilt for the next move and yesterday there were at least 5 to 7 big and small periods where the futures hanging at the same prices for anywhere from 10 minutes to 2.5 hours.

The other part is, when out of nowhere they move sharply, they generally retrace soon after the initial move. Maybe I am wrong, but I think the index markets are continually evolving and these are some new patterns that have arisen over the last few months as the volumes have fallen.

I am sure there are several reasons, but I think the main one is simple: Economic Conditions. During periods of economic uncertainty, investors become more cautious, leading to reduced trading volumes as market participants adopt a wait-and-see approach or hold onto their investments rather than actively trading. I’m curious what you think about where the volumes have gone…

MiM and Daily Recap

The ES sold off down to 5244.50 at 9:29:40 am and opened Wednesday’s regular session at 5247.50. After the open, the ES traded 5247.00 and then rallied up to a 5257.00 double top at 9:56, dipped down to 5252.75 at 10:00 when the Institute for Supply Management’s (ISM) non-manufacturing survey slipped to 51.4% in March from 52.6% in February, indicating a slower pace of economic expansion and rallied the ES up to 5264.00 and then went on to make 7 higher highs up to 5280.75 at 11:22. 

After the high, the ES sold off down to 5269.25, bumped up to 5273.25, sold off down to 5268.00 at 12:10 and then rallied up to a lower high at 5279.50, sold off 2 ticks under the VWAP at 5264.50 at 12:39, and then rallied up to a lower high at 5278.00 at 12:45 and then back-and-filled its way back up to a new daily high at 5279.00 at 2:12. From there, it traded back down to 5268.00 at 2:29, had one last up tic above the VWAP up to 5271.25 and then a sell program hit, pushing the ES down to the 5248.25 level at 3:15 as the Mag 7 rolled over. 

After the low, the ES popped back up to 5260.75, pulled back to a higher low at 5252.25 at 3:26 and then shot up to the VWAP at 5266.00 at 3:40. The ES traded 5262.00 at 3:43 and traded 5268.75 as the NYSE 3:50 order imbalance showed $1.5 billion to sell, traded down to 5261.75 and traded 5265.25 on the 4:00 cash close. After 4:00, the ES traded up to 5271.75 at 4:59 and settled at 5269.00, up 7 points or +0.13%. The NQ that made a low at 18,232.50 rallied up to 18,451.75 and settled at 18,373.25,  up 43.25 points or +0.24%, and Crude oil made a high at 86.20 and closed at 85.65, up .50 cents, and the YM closed down 7 points at 39,501.00.

In the end, the study I had done from @HandelStats was right on: When Monday and Tuesday are down in April Wednesday is up…and up it was. In terms of the ES’s overall tone, it was firm but it also felt like people got caught off-base. In terms of the ES’s overall trade, volume was steady but low: 201k traded on Globex and 1.104 million traded on the day session for a total of 1.241 million contracts traded.

Technical Edge

Guest Post — GMTT

Mid-Feb we called for the low in Gold which was then trading at around 1990.

Since we called the low Gold has been up over 15% and reached Tuesday our next upside target of 2308.

As you can see on the chart the low was easy to spot, but the high looked initially to be in around 2240. That is where the indicators started to give a sign that it was technically ready to roll-over. We did see a pull-back around that level and then the final push up where we are currently trading at – yet another all-time high in Gold. As we published earlier this week, we do find it alarming to see gold bounce significantly which is usually the case by uncertainty in the economy (think of the R word) and or Geopolitical tension.

Gold tends to be inversely correlated to the direction of the stock market and here too we raised a red flag as the stock market continues to make new all-time highs.

So far we did see on Monday and Tuesday a relatively minor pull-back in the Indices but not what we are looking for as to the correction we mentioned. This could be just a little washout for the buyers to get back in for the final move up before we start a more serious correction.

The question is what to expect and what Gold will do once we hit a 10 – 25% (or even steeper) correction on the stock market… we think that gold will eventually tank too.

As for now, we can see that gold is getting a little tired at its all-time high and based on our overall technical model we foresee a pull-back.

For the short-term outlook: next projected upside targets: 2318 and 2326.

The buy signal gets canceled on a close below 2266.

About GMTT:

GMTT is a market newsletter with a different approach than many others.

Its focus is to find the tradable low or high in a market.

Pre-warns when there is a turning point and aims to be ahead with entering a trade.

It does result sometimes in small losses when we have been too early, but with given tight stops they tend to result into profitable trades.

We very much calculate the risk /reward ratio and when it is in accordance to our guidelines we enter the trade.

The daily update consists of shorter term trading signals and covers: E-mini S&P 500 , VIX (cash) Gold, Silver, Copper, Crude, Nat Gas and BTC/USD.

We give in these updates frequently our Thoughts (as we call them) where we give our unique view / forecast for the near-term in the financial markets.

Our aim is to make it easily readable for the receiver which is the reason that we do not publish charts and keep the text to a minimum.

For more information and to sign up please email us at: newsletter@globalmacrotechncial.com

Economic Calendar

For a more complete Economic Calendar see: https://mrtopstep.com/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!