on March 21, 2024

No Time for a Victory Lap

ES new all-time highs post-Fed

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Our View

I am not going to take any victory lap. Whenever I do, I start making bad calls. But that’s not the real reason.

The real reason is, no one likes a braggart.

To me being right is simple — I stay with the trend. We all know election years are bullish, but that’s a smaller part. The larger part is the $1 trillion the government is printing every 100 days, do the math. It’s totally unprecedented and it’s back to the old saying when there was zero borrowing cost — don’t fight the Fed — although the Fed has rates sitting above 5% now, well above the days of ZIRP.

Finally, I know people pay a premium to get the full version of the Opening Print and I want to thank all of you. But I also want to point out that the $10,000/month newsletter the PitBull pays for has been buying puts in everything for the last 2 years with only a few bullish calls. I also know a few other well-known market-timers that have been selling for months and months.

I always say I am not smarter than you… I just don’t fight the Fed.

Our Lean

The PitBull said it looks like Dow 40,000. What I say is, the ES has rallied 137 points in 3 days. As I’m writing this, it’s 8:00 pm ET on Wednesday night, and the ES just took out 5300 and traded up to 5304.75. For reference, Friday’s low was 5167.75. There are two rules that come to mind:

The ES never does what most people want it to do when they want it
It takes days and weeks to knock the ES down and only 1 to bring it back.

Our Lean: There are 5 economic numbers between 8:30 and 10:00. My instinct is that while it can make some early new highs, the ES is due for a pullback. On a day-trade basis, a knockdown would shake out some weak longs and add some shorts, both of which are bullish.

What I don’t want to do is buy anything into a rally early in the day. I could be wrong but… there is always a pullback/drop and that’s what I am looking for. The other thing is FRYday’s week 4 options expiration. I still think we can see higher prices and I have a big band of support between the 5271-75 level down to 5260 and that’s where I would feel ok with adding some longs.

MrTopStep Levels:

How to use MTS levels

MiM and Daily Recap

ES Recap

The ES had a 10-point range on Globex from 4243.00 to 5233.00 on low Globex volume of only 140k and opened Wednesday’s regular session at 5241.00. After the open, the ES traded 5243.50 and sold off down to 5235.25 at 9:52 and then back-and-filled under the VWAP, then rallied up to 5247.75 and slowly sold off 5233 at 1:46. Yes, you are reading this right, there is only 390k ES that has traded on the day session so far and I will report the volume just before the Fed announcement so we can compare the volume pre-Fed and after.

After the low, the ES rallied back up to the VWAP at 5239.50 at 1:58 and then ripped up to 5267.00 at 2:05 after the Fed headlines hit the tape that said the Fed still expects to lower rates three times this year and then dropped back down to 5246.00 at 2:18, popped back up to 5263.25, dropped down to 5241 and it was that low that set off the rally up 5278.50 at 2:50. After that, the ES did a sideways back-and-fill from 5278.50 to 5270.00 until 3:04 and then rallied up to 5284.00. After the high, the ES sold back off down to 5271.50 at 3:13 and it was that low that set up the next new high up to 5289.50 at 3:33. The ES dropped down to 5275.50 as the 3:50 cash imbalance showed $787 million to sell and traded 5286.25 on the 4:00 cash close. After 4:00 the rip continued all the way up to 5297.75 at 4:55 and settled at 5294.75 on the 5:00 futures close, up 45 points or 0.86% on the day.

In the end, the first 4.5 hours of trading was a narrow drag, but after 2:00 the ES rocketed higher and didn’t look back. In terms of the ES’s overall tone, it acted firm. In terms of the ES’s overall trade, volume was pitiful until 2:00 and piled on over 500k lots in the final 2 hours. A miserable 140k traded on Globex and 1.178 million traded on the day session for a very low total of 1.318 million contracts traded.

MIM

Technical Edge

NYSE Breadth: 81% Upside Volume (!)
Nasdaq Breadth: 80% Upside Volume (!)
Advance/Decline: 78% Advance
VIX: ~12.75

ES Daily

Guest Post — HandelStats

This chart illustrates the weekly volatility of Gold Futures (GC), along with a snapshot of a specialized tool designed for calculating standard deviation levels. This tool is instrumental in assessing market volatility. It’s set to show the current date and the countdown to the year’s end, yet its core functionality relies on the last closing price from the preceding Friday(or any day you choose).

The focus is on computing the standard deviation over a 5-day span. Additionally,I’ve included a document from Handelstats that delves into the nuances of standard deviations. This compilation of resources is invaluable for investors and traders who depend on a deep understanding of market dynamics to make strategic decisions.