Looking to Sell the Rallies Amid Heightened Volatility

It’s monthly Opex today.

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Our View

There is a lot of anxiety out there right now and I think it’s set to increase. I know there have been other times when the US was potentially heading into a war and how erratic the markets got.

I also know that the markets rallied, but this seems different; it feels like things are falling out of balance. For instance, the 10-year Treasury yield is now at 5%, 30-year mortgages are at 8.5% and credit cards at 32%.

What happens is, when countries like Israel and Hamas are warring, people forget about things like commercial real estate, the dollar or the $33 trillion debt — and don’t forget, that last debt-ceiling can was only kicked to mid-November.

Let’s face it: The US is spinning and what better time to turn up the heat with the US military so spread out. Hey, maybe I’m wrong and we are all going to wake up and everyone will be friends, but I don’t believe that, and let’s be honest, nor do you.

Our Lean

I think things are going to get very volatile. My lean is to sell the rallies and ultimately, I think we are going a lot lower.

That said — and like yesterday — I cannot rule out the 30 to 50-point rips. Keep an eye on yesterday’s 50% retracement, up at 4328.75.

Remember, be careful, don’t hold losers, get in and get out, don’t fall in love with your position, and most of all use stops. Lastly, remember that the further the ES falls, the bigger the bounce. ES 4200 on TAP.

As for levels, Handelstats says:

MiM and Daily Recap

The ES traded down to 4320.75 on Globex and opened Thursday’s regular session at 4347.75. After the open, the ES rallied up to 4352.25, sold off down to just below the VWAP at 4339.75 and back-and-filled until 10:05. From there, it traded down to 4338.00, rallied up to 4349.25 and then sold off down to 4324.50 at 10:33. From 10:32 to 11:13 the ES back-and-filled in a 3 to 6 point range, down-ticked to a new session low at 4222.25 at 11:23 and then rallied up to 4366.50 at 12:22.

The ES looked bad, but just after the 4322.25 print I posted this in the MrTopStep trading room:

IMPRO: Dboy :(11:25:55 AM): That was the low

The ES then rallied all the way up to to 4362.25 at 1:08, fell back down to 4327.75 at 1:52, traded back up to 4338.00 at 2:06 and then sold off down to 4303.50 at 2:56. The ups and downs were intense and the ES rallied up to 4313.25 at 3:06, then dropped down to a new low at 4300.75 at 3:30 and then rallied up to 4310.75 at 3:37 as the early imbalance showed $240 million to buy.

After the uptick, the ES got hit by a sell program that pushed it into sell stops under 4300.00 down to 4294.75 and it traded 4305.75 as the final 3:50 cash imbalance showed $641 million to buy and traded up to 4311.50 at 3:52 and traded 4301.50 on the 4:00 cash close. After 4:00, the ES sold back down to a new low at 4292.75 and settled at 4296.50 on the 5:00 futures close, down 39.25 points or 0.90% on the day.

In the end, it was a wicked day of rips and dips. In terms of the ES’s overall tone, price action was weak but there were some big rips. In terms of the ES’s overall trade, volume was high: 353k ES traded on Globex and 2.319 million on the day session for a total of 2.668 million contracts traded. That was the highest daily trading volume since March.

Technical Edge

ES

Levels from HandelStats.com

NQ

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!