Is This the Start of the Year-End Rally?

How long will the bull-run continue?

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Our View

As I have said several times now, I am looking for some type of end-of-the-year rally. However, I also don’t think the current selloff is over — there is just too much risk out there.

Am I happy they rallied? Yes, I was long. A friend of mine who has been trading very well called me yesterday around 12:15 and complained that, “I’m only up $2k, I should be up $20k, I really missed this, the ES was trading under 4120 and rallied up to 4248.”

My advice to him is the same advice I give the PitBull every day…if you miss a trade, don’t worry about it, another will come along.

The bottom line: Trades are like buses; if you miss one don’t fret about it, another one will come along soon enough.

Our Lean

The ES traded up to the S&P cash 200-day moving average yesterday and Apple reports earnings tonight. The Fed didn’t say anything we didn’t know. It held rates unchanged and left open the possibility of raises in the future.

Our lean: Keeping it simple if the ES rallies overnight and into the morning — it’s my guess you can sell a gap-up open or wait and sell the early rallies and buy the pullbacks. Should the ES open lower, I would look to be a buyer on the open. This should be a day of a lot of rips and dips.

Lastly, it can be rough out there. As we head into the holidays, it’s always a good time to reach out to friends and family we have not spoken to recently. It will only take a few minutes and can go a long way for someone who needs it.

For those of you who like HandelStats levels, here they are:

Upside: Trade and close above 4288.94 targets 4297.50, the +2 weekly sd at 4314.60/ 4315.19, then +2 sd at 4321.27. Hourly close above there targets 4336.25. (4315.19 is high target of mFib).
Downside: Trade and hourly close below 4280 targets 4273.62, then 4267.25. Hourly close below there targets 4262.69, then 4:15 settlement at 4255.25. Hourly close below there targets 4236.50, then -1 sd at 4222.24. Hourly close below there targets 4194, then -2 sd at 4189.23.

MiM and Daily Recap

ES Recap 15-min

The ES sold off down to 4171.00, rallied up to 4224.75, and opened the regular session at 4221.50. After the open, the ES pulled back to 4215.50 and traded up to 4234.50 at 10:00, pulled back to 4221.00 and rallied up to 4248.50 at 10:47, and then traded back down to 4231.50 at 11:24. From there, it fell into a small upside back-and-fill for the next 35 minutes and broke down to 4222.25 at 12:45. After the low, the ES rallied up to 4233.75 at 1:16, pulled back and then made 3 separate highs up to 4239.50 at 2:00, then sold off down to 4239.50 at 2:00, traded down to the 4222.50 level at 2:16, ripped up to 4247.50 and then sold all the way back off down to 4220.25 at 2:49.

It was that low that set off a ~45 point rally up to 4264.75 at 3:34. After the new high, the ES pulled back down to 4257.00 at 3:41 as the early imbalance showed $103 million to sell and then rallied up to 4261.25 at 3:44 before trading 4260.50 as the 3:50 cash imbalance showed $1.4 billion to buy and traded 4257.00 on the 4:00 cash close. After 4:00, the ES traded down to 4253.50 and settled at 4258.25 on the 5:00 futures close, up 43.75 points or 1.04% on the day.

In the end, we said in the lean yesterday that there was a very high level of shorts and that they had not squeezed. In terms of the ES’s overall tone, the trade was exactly what we called for, sell the early rallies and buy the dip. In terms of the ES’s overall trade, volume was steady: 312k traded on Globex and 1.648 million traded on the day session for a total 1.96 million contracts traded.

Technical Edge

NYSE Breadth: 57% Upside Volume
Nasdaq Breadth: 61% Upside Volume
Advance/Decline: 68% Advance
VIX: ~16.5
- Down almost 30% from last week’s high

ES

Levels from HandelStats.com

ES Daily

Upside: Trade and close above 4288.94 targets 4297.50, the +2 weekly sd at 4314.60/ 4315.19, then +2 sd at 4321.27. Hourly close above there targets 4336.25. (4315.19 is high target of mFib).
Downside: Trade and hourly close below 4280 targets 4273.62, then 4267.25. Hourly close below there targets 4262.69, then 4:15 settlement at 4255.25. Hourly close below there targets 4236.50, then -1 sd at 4222.24. Hourly close below there targets 4194, then -2 sd at 4189.23.

NQ

NQ Daily

Upside: Trade and hourly close above 14921.38 targets 15.33.25, then +2 sd at 15046.65. hourly close above there targets 15106.25, then 15155.25, then 15186, then 3 sd at 15199.34.
Downside: Trade and hourly close below 14879 targets 14842.12, then 14805.25. Hourly close below there targets 4:15 settlement at 14741.25. Hourly close below there targets 14638. Hourly close below there targets -1 sd at 14588.55. Hourly close below there targets -2 sd at 14435.85.

Guest Post — Rich Miller AKA Handelstats

Continuing from last week’s discussion on the fundamental components of Ichimoku, let’s now delve into the pivotal element that not only lends its name to Ichimoku Kinko Hyo, the Ichimoku Cloud but also provides us with a profound understanding of the insights these distinctive charts offer. The term “Ichimoku” is Japanese and can be translated as “one glance equilibrium chart.” This method is meticulously crafted to provide traders with a swift and all-encompassing evaluation of a financial instrument’s price movement, all at a single glance.

When we apply Ichimoku charting techniques to any financial instrument, we can instantly discern levels of bullish or bearish sentiment. We ask questions like: Is the Cloud colored red or green? Is the cloud exhibiting a trend? Is the price positioned above or below the cloud? In the present chart, all the elements indicate a bearish outlook. By scrutinizing the chart, we can determine the conditions necessary to transition it to a bullish outlook. This analysis enables us to make predictions about when the price may need to move, and if the chart elements show sufficient strength, we can confidently assess the likely direction of the market.

Over the upcoming segments, we will explore the significance of each individual element, why I incorporate additional components, and the value they bring to our comprehension of Ichimoku.