If Bonds Bounce, Equities Can Too

They ran the sell-stops yesterday.

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Our View

Well we got our down day, but that doesn’t make me happy. It seems like my 10 Deadly Sins are catching up with the stock market. I’m going to make this easy on you today and keep things short. The markets don’t look good, but that doesn’t mean a rip isn’t coming.

The bull’s back broke yesterday. After a few weeks of holding above 4290 to 4300, they finally ran the sell stops that were building below. That was my key warning from yesterday in Our Lean.

I warned my trading room that: IMPRO: Dboy :(10:05:16 AM) : there is a giant line of sell stops 4290.50 down to 4276.

Within minutes the ES traded down to 4373.75. It was that move that set the tone for the day.

MiM and Daily Recap

The ES rallied up to 4335.75 on Globex and opened Tuesday’s regular session at 4300.75. After the open, the ES traded up to 4317 at 9:56, down-ticked, then made a lower high at 4316 at 9:54 and dropped down to 4299, a 17-point drop in 6 minutes. From there, it up-ticked a few points and then tanked down to 4273.75, back-and-filled for the next 20 minutes, sold off down to 4364.25 at 10:53, did some small back-and-fill and sold off 4262 at 11:12. For the next 20 minutes, the ES back-and-filled, traded up to 4271.50 and then sold off down to a new low at 4357.00 at 11:39 and slowly rallied up to 4278.25 at 1:03.

After the high, the ES sold off down to 4351.25 at 2:19, traded back up to 4265.25 at 2:25 and then traded back down to 4352.25 at 3:35. Then in one bar, it rallied up to 4263.75 at 3:45 as the early imbalance showed $7 million to sell. The ES traded 4261.50 as the 3:50 cash imbalance showed $375 million to sell and traded 4268 on the 4:00 cash close. After 4:00, the ES traded up to 4269.50, dropped down to 4363.75, and settled at 4262.75 on the 5:00 futures close, down 61.50 points or -1.42% on the day.

In the end, bonds fell 2 points (and hit new lows) and the higher yields finally caught up with the stock market. In terms of the ES’s overall tone, with the exception of a few rallies, it was all sell programs and sell stops. In terms of the ES’s overall trade, volume was high again: 380k traded on Globex and 1.8 million traded on the day session for a total of 2.18 million contracts traded.

Technical Edge

Guest Post

PTG / Taylor 3-Day Cycle

Author: David D Dube’ (a.k.a. PTGDavid)

Website: https://polaristradinggroup.com/

Prior Session was Cycle Day 1 (CD1): Normal for CD1 is for a decline, as price did, and reached its Violation Level before some type of “relief-rally” started. Prior range was 60 handles on 1.894M contracts exchanged.

…Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): Markets may retest prior lows before a sustained cycle rally unfolds. Key Level to convert to upper support is 4275 handle. As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4275, initially targets 4295 – 4300 zone.

Bear Scenario: Price sustains an offer below 4275, initially targets 4235 – 4230 zone.

PVA High Edge = 4290 PVA Low Edge = 4251 Prior POC = 4468

*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet > > Cycle Day 2 (CD2)

Thanks for reading,

PTGDavid

Open Positions

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!