Disclaimer: For educational use only. I’m not dispensing financial advice. We are having an intellectual conversation (you and I) on the topic of trading the Emin futures using the Lens of Wyckoff Principles and the Eyes of WB’s clock. The clock that controls all turns intraday, every day!
Some younger traders may have gotten themselves short yesterday. And some older traders may have too!
When I saw that dip down around 10:10, I was excited. I knew that the bigger traders, as WB would say; “Tuna/Billfish traders were getting long for the extended run to the close and perhaps a few days more!”
Had you been a subscriber, you would have received this in your email inbox before the opening bell:
“Trade Plan: Bigger traders are shorting and getting their heads handed to them. The PPI and Jobs numbers are out at 8:30 am today. It’s a grind up on a summer day. Traders are wanting 30 and getting 10 handles.
A Rolling Stone song comes to mind…
This day has the best payout if you get long the AM LOW and hold till the LAST HOUR HIGH. That is; if buying support is constant throughout the day. However, that low could come around 11:30 after the PEON close and rally back up to the opening print at the start of the lunch slog. Ideal would be 10:30 low seal.
WB might have said; “SPOTS, TA’s, and roundies, or just enjoy the summer day!” That’s the power of a S2L day!”
Now, if you need fundamental and technical reasons for yesterday? The CPI was released Wednesday. Price behavior dipped with no supply pressing upon the market. Just a series of lower highs. As the number was released at 8:30 am accumulation volume lifted all the offers and held price at a new high of day.
Then Thursday the PPI number and Jobs number were released. Regardless of what the pundits said about what the Fed will or will not do. The dip down to the AM LOW gave the bigger traders (Tuna/Bullfish) a wholesale price and lifted the shares from weaker to stronger traders as the weaker traders hit the bid on the way down.
The trifecta would have been the S2L day. You would have needed to understand WB’s clock to have known that.
Market Timing: I’ll say it again, “Perfect S2L day!” Spill up sealed at opening print. AM LOW seal at 10:10 am. (10 minute residual bear). Lunch seal high at 12:05 pm. Mid pm low early and weak at 2:05 pm (the dog leg I was referring to). LAST HOUR HIGH at closing print new high of day and new all time high! If you do not understand this drop me an email at trader@wyckoffamtrader.com
Weekly: Lifted price out of the overhead supply on extended price and volume.
Daily: Price tested the low at 10:00 or so and quickly found a bid that rallied price out of the previous day’s high onward and upward to set new highs.
Technical Position: Price dips down for 40 minutes to test the previous CASH / RTE close and settle. A 50 minute buying wave takes out the open and previous day high. A 30 minute dip is unable to penetrate the previous day high. A 60 minute buying wave with higher highs and higher lows sets a new high. A 70 minute re-accumulation during the lunch SLOG follows that respects the demand line at 1:20 pm. A 160 minute buying wave print a new high of day at the closing print is somewhat increased volume. This indicates that the longer term traders have not gotten out. Potential for further upside progress.
Looking Forward Friday, August 13, 2021
GLOBEX: As I write price has pulled 3 points off the all time highs. Trading in a tight 4 handle range. Currently holding the highs of 2:40 pm RTE CASH.
Trade Plan: Even not knowing the clock most traders would be saying the bulls will need to hold their gains. This day is susceptible to bulls getting themselves overbought and bears finding chinks in their armor. It’s a wild card day. A day, Straight Up / Straight Down, or just a Chop tilt.
Offing Events: The debt ceiling was kicked till September. Trillions in the Senate were voted on. A variant of the virus is on the rise. Delta, Lamba is Gamma next? The country is coming undone at the seams. September / October may just be the catalyst for the truth to be revealed. Cyberwar perhaps kinetic looming?
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Baxter:
Missing today. Back tomorrow.
Chart of the Day
S&P 500’s record run leaves behind NYSE-stock indicator
Many companies listed on the New York Stock Exchange have been left behind by investors as the S&P 500 Index extends a record-setting run. A cumulative advance-decline line for NYSE stocks slipped as much as 3.7% through Tuesday from a record set June 8, according to data compiled by Bloomberg. After the A-D line peaked, the S&P 500 climbed to records 20 times, with the latest one registered on Wednesday. The contrast is a “non-confirmation to keep an eye on,” Liz Ann Sonders, chief investment strategist at Charles Schwab Corp., wrote in a Twitter post Wednesday.
Market Review
The ES was up a little and down a little before and after the jobless claims number fell to 375,000. Despite the concerns over the Covid-19 Delta variants spreading, the ES made its 47th record high close.
The S&P futures opened yesterday’s regular session at 4439.50 and sold off down to 4430.25 at 10:15 am. After the early low, the ES and NQ got hit by a series of buy programs that were followed by small pullbacks all the way up to 4456.25 at 3:40, up 26.25 points off the 4430.00 low of the day.
The ES traded 4453.25 as the 3:50 cash imbalance showed $932 million to sell. After the cash closed, the futures traded in a 3-point range and settled at 4456.00, up 15.5 pints or 0.35% on the day.
In the end, all the ‘back and fill’ and low volumes over the last few weeks added fuel to the upside push. As I have tried to explain, the short sellers and buy stops help facilitate the buy programs and that’s what happened.
In terms of the ES’s overall tone, the futures were firm all day. In terms of the day’s overall trade, volume was low at 830,000 contracts traded.
Our View:
The Dow and S&P settled at new all-time highs yesterday with the S&P notching its 46th new closing high in 2021. I have to admit, this has gotten silly. The total lack of pullbacks should have red flashing lights all over it. But as long as the government is supplying trillions of dollars in liquidity, it’s just impossible to fight.
Yesterday I followed my call and sold the open, but when it went down and went back up, I scratched and then watched it fall 10 points.
Maybe my impatience has something to do with being a floor trader.
Where the big S&P was $500.00 a point, I had no problem buying and selling 5 lots to 15 lots all the way up to 75 lots when I was doing crazy stuff. I had a goal I set at $6,000 a day.
Back then there was only a fraction of program trading vs. today, so catching a 3 or 4 points winner and making $4,000 or $6,000 was “easy” — but today the ES is loaded up with algorithmic and high frequency trading and it reacts what I call “false starts.”
These programs fake you out and that’s what happened yesterday. As I said in the MTS forum during Wednesday’s session, I had to fight all of July to make back what I lost early in the month. So far in August I have done OK, but I have yet to really get into a groove. The low-volume chop is great if you are not over-expecting and willing to take quick profits, but holding has not been easy. Thus I am grinding it out and it tends to wear me out.
Our Lean: As I have said in the past, I think we well know when the ES starts to really crap out. It’s up high enough that when it actually does fall hard, you will have enough time to jump on the bandwagon. In the meantime, the exceptionally low volume is definitely helping the bulls. That’s why they call it the Dog Days of Summer and it’s also why they say to never short a dull market. The time will come when traders are yelling “timber,” but so far, that time hasn’t come quite yet. Until that changes, why should our lean? Our lean is to sell the early rallies and buy the pullbacks. It’s 8:30 pm and the ES is trading 4440, only 10 points off ES 4450.
As we all know, there’s no crystal ball when it comes to trading stocks, options, or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk-free for 30 days.
Danny Riley is a 39-year veteran of the CME trading floor. He ran one of the largest S&P desks on the floor of the CME Group since 1985.
As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
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