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. 

MiM and Daily Recap

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

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.

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!