Market Review
The ESH21 posted a 120.75-point range on the first trading day of the year, nearly a 4x range expansion of the previous week’s holiday trading. Happy New Year! I am not sure what it is about Mondays but since Thanksgiving, Mondays have been bearish. The stat does not mean anything, just an observation.
So how did last week’s posted support areas hold up? The first support area reached on Monday was 3676-3678 which became a bump in the road of the heavy selloff. The area tried to hold but ultimately failed.
The next 3651-3663 support area held the low of the day where, after a retest, the ESH21 retraced about a third of Monday’s range.
This week’s wildcards are political; the Senate runoff election in GA today and the electoral vote by Congress tomorrow which could be filled with bitter contention not seen since the Hayes-Tilden election of 1876. Several Senate Republicans plan to object to the electoral votes from states Trump contests which could drag the normally procedural vote into the evening. The markets have ignored the political theater since the election and most likely will continue to do so.
Resistance Areas (above):
3753-3773s
Support Areas (below):
3651-3653s
3596-3620s
3568-3585s
3535-3538s
3499-3510s
Economic Calendar
Closing Prices
In the Tradechat Room
MiM
With 100 points down the MIM by15:30 was suggesting a buying MOC at 15:50 and an 18 point run against the trend set in. The 15:50 reveal was 3.6B to buy with a 68% lean to the buy-side. That topped out the run from 15:30 with mostly sideways action into the close. There were plenty of willing sellers into that buy as the 15:55 dquotes paired us down to nearly 0.
Questions? Please email me: Marlin@mrtopstep.com
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Covid Corner:
Data continues to look grim as the world fights the latest round. The UK, US, Germany and Italy are topping ou the new death/million chart, not many on these charts have a downward trend indicating it is going to be worse before it is better.
Wear your masks!
Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line)
Stay home!
Take your Vitamin D!
Chart of The Day
GMTT – chart of the day – Copper – Jan 5, 2021
Copper (MAR)
Copper is up 90% since its last low in March 2020.
Our medium upside target was 3.67.
We go to 3.64 before it stalled and since Copper has been trading in a range.
The direction based on the overall technical model is not entirely clear.
We get technically again a sell signal on a close below 3.57.
Gold (APR)
GMTT called the low in Gold around 1764 and we have been long several times since.
Now long again from 1901 and we get a next upside target of 1986.
Raise the suggested sell stop to 1936.
Silver (MAR)
Here we called the low at 23.15 and late last year we gave a medium upside target of 32.00 and higher.
This morning Silver is trading around 27.60 which is so far a move of close to 20% from its last low.
Suggesting raising the protective sell stop to 26.15.
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GLOBEX
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3773.25 | Opening Print: 3758.50 |
| Low: 3738.25 | High 3760.00 |
| Volume: 175,000 | Low: 3652.50 |
| ES Settlement 3691.25 | |
| Total Volume1.9M |
S&P 500 Futures: 2021 Opens With the Biggest Sell Since October
After trading in a 35.00 handle overnight range, the S&P 500 futures opened higher at 3758.50 on Monday and put in a daily high of 3760.00 in the opening moments before reversing and selling off hard through the morning eventually finding the daily low of 3652.50 just before 11:30 CT, a 107.50 handle reversal. From there, the ESH did get a lift into the noon hour up to 3690.75 for a midday high before going sideways for most of the afternoon.
The final minutes of the session did see a bounce to the afternoon high of 3699.25 before settling at 3691.25, down 56.00 handles or -1.59% on total volume of 1.9 million. In terms of price action, it was all about selling the open and covering late morning. Buyers of the late morning low who held into the close did get paid, but the best trade was the sell.
Our View
#ES Uncertainty
I had part of yesterday right; sell the open. I made 20 handles and 2 hours later the futures were down 120. I was as bearish as I could be but didn’t fully benefit from a decline that was long overdue. Let’s forget everything else, the ES rallied 40 handles on Thursday’s close and rallied another 10 up to 3773 before yesterday’s 9:30 ET futures open. I know there are no ‘shoulda, woulda, coulda’s’ in trading when Investors Intelligence at 62%, the bulls just went too far, too fast.
The ES started selling off immediately after the open but accelerated when a headline hit the tape saying the ‘democrats were pulling ahead’ in the Georgia special election and tanked when the headline hit that Trump tried to solicit the Georgia Secretary of State Brad Raffensperger for a recount and to “find 11,780 votes” that would put him in the lead over President-elect Joe Biden in Georgia, which has already certified its results, and went on to threaten Raffensperger with the possibility of criminal charges unless he comes up with the votes to overturn the election results. While this was going on large crowds were starting to show up in Washington DC for the Trump March with thousands of supporters chanting ‘fight for Trump’. All of this on the heels of the Republicans in Congress opposing certification. There is only one other time in history when the country was this divided and that was the election of 1876.
Our view, I had a feeling the ES was going to top out this week but I had no idea it would fall.
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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