Market Review
The ES sold off down to 4436.25 on Globex Sunday night and opened Monday’s regular session at 4444.25.
After a small pop, the ES pulled back down to 4436.75, 2 ticks shy of the Globex low, and then rallied all the way up to 4461.50 going into 10:15 ET, up almost 25 points off the low. The ES pulled back down to 4455.25 and then made a series of higher highs up to 4465 at 10:45.
After pulling back to the 4461 area, the ES traded up to 4468.75, sold off 2 points down to 4466.75 then marched up to another new high at 4474 going into 11:30. The ES pulled back down to 4468 and then rallied up to 4474.75, at 12:10. For the next three hours, the ES “back and filled” in a 6-point range until some buy imbalances showed up that pushed the futures up to a new high at 4475.50.
After a minor pullback, the ES made another new high at 4476.50 as the early MIM showed $427 million to sell. The ES traded up to 4478 and down-ticked as the MIM flipped to $2.4 billion to buy and traded up to 4479.75. On the 4:00 cash close, the ES traded 4477 and went on to settle at 4476 on the 5:00 futures close, up 10.75 points or +0.24% on the day.
In the end, the S&P has closed higher 4 sessions in a row and is now up 185.75 points from its 4218.75 low. In terms of the ES’s overall tone, with the exception of the lower open, it was firm all day. In terms of the ES’s overall trade, volume was LOW at 1.136 million contracts traded.
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Closing Prices
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Market On Close: $2.4B buy, buyers liking tech.
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SpyGate: Programs were either shorting or taking profits in the AM session. Much more neutral in the PM sessions.
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Baxter
Baxter is our new AI trading helper. This data is early, new, and not very well tested but we want to share some of our findings. We are concentrating on the SP500 which should benefit ES futures and SPY traders.
Last Trading Day:
High: ~15:50 (MOC)
10:00 – 12:00 26% (wrong)
12:00 – 15:30 30% (wrong)
Low: ~09:35
09:30 – 10:00 36% (right)
15:30 – 16:00 24%
Today:
High:
09:30 – 10:00 >90%
Low:
09:30 – 10:00 36%
15:30 – 16:00 43%
Chart of the Day
Record age of U.S. assets is seen as investment catalyst
“New investment is certainly needed” in the U.S. and faster inflation may serve as a catalyst, according to Bank of America Corp.’s research investment committee. The panel raised the issue in a report last week that cited annual data on the country’s capital stock: offices, machinery and other fixed assets, along with consumer goods such as autos and appliances. The figures, compiled annually by the Commerce Department, shows the average age of those assets has risen every year since 2001 and has set records since 2014. Last year’s average was 22.4 years, exceeding a peak reached in 1940 by 8.7%.
Our View
Welcome To Turn Around Tuesday
The higher the ES goes the lower the volume gets, that’s just how this works. Big-volume selloffs and low-volume rallies are the hallmarks of the S&P 500 futures price action. There are a lot of big-name companies reporting this week and while I remain bullish, the ES has rallied 185.75 points over the last 4 sessions.
As you know I raised my year-end forecast for the ES from 4600 to 4750 but I cannot rule out some bumps in the road along the way. And there are still 9 sessions left in October (including today) and I do not want to get ‘overly bullish’ — especially after such a big rally.
Our Lean: As I always say, there are two ways to approach this. First, sell the early rallies, especially if the futures gap higher on the open, and buy the pullbacks. Second, just follow the trend and buy the pullbacks. I suspect that if the markets keep going up, the ranges will narrow and thin-to-win will prevail.
Plus, there are a ton of buy stops that start above 4486 up to 4520.
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 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.
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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