***Written 8 pm Tuesday evening for Wednesday’s trading
Tuesday’s Session wasCycle Day 2 (CD2): Price oscillated back n forth as expected for this day type. Once price tested the projected CD2 Deviation Low (3673.25) this cycle’s rally took firm hold, finishing the session with 3 Day Cycle Target (3718) being fulfilled. Market on Close Buy Imbalance of $3.6 Billion capped the session. Range was 56.75 handles on 1.355M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us intoCycle Day 3 (CD3): Residual bullish momentum is anticipated to continue into today’s session, as Bulls have regained control. Although cycle objectives have already been fulfilled, additional upside targets are achievable. There are two estimated scenarios to consider for today’s trading.
Another large buying MOC at 15:50 having 3.7B to buy with an 80% lean to the buy-side. The MOC, as on Monday, was paired at the 15:55 dquotes were opened, showing there are plenty of sellers to satisfy what might be passive investor buys for funds. The upside move on the MOC came on the 14:50 candle as the MIM continued to grow through the afternoon. On the reveal, the price tried to climb through that 3625 area of resistance but faltered into the close.
What a difference a week makes as almost all states are now in the rising category. California is in a holding pattern for new cases but hospitalizations and deaths continue to climb as they lag new cases. States that had been doing well like, VT, ME and HI are now joining the fight as the virus finds fresh pockets of vulnerable people.
Second shots of vaccine are being given which should offer those people immunity in a couple of weeks. The second shot can be harsh according to the testing data so we could hear some horror stories about the 2nd shot.
The UK is in a hard lockdown until the end of February as Europe continues its battle. There is a new version of covid that appears to have some new traits that are concerning in the fight against the virus. Strain 501.V2 is becoming prominent in South Africa and Brazil during their summer seasons. A preliminary observation is that antibody theraputics do not appear to be as effective on the new strain, that leads to concern over the vaccine’s effectiveness, too.
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 – Soybeans – Jan 6, 2021
Soybeans (MAR) Once again we are showing the Soybeans chart. The big move from the August low at 867 to a high this morning of 1378. Technically this huge rally is in the beans is running out of steam. We already exited our long position and want to go short below 1336.
Wheat (MAR) GMTT is long Wheat from 581 and we still get a next upside target of 684. Suggesting to raise the protective sell stop to 634.
Corn (MAR) Corn reached a high of 502 and we are long from 428. We took exited the long position with a 15% gain in just two weeks. Now looking to go short below 474.
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(ESH20:CME) GLOBEX Session
(ESH20:CME) Day Session
Opening Print: 3685.50
S&P 500 Futures Recap – Trade Date January 5, 2021
2021’s First Turnaround Tuesday
After trading in a 31.75 handle overnight range, the S&P 500 futures opened at 3685.50 on Tuesday, put in a daily low of 3685.25 in the opening moments before rallying up to 3714.00 in the first hour. Then after a midmorning pullback to 3687.00, buyers once again gave equities a lift as the index futures would grind higher through the rest of the morning and noon hour.
The afternoon would see buy programs show up at 1:00 with the ESH pushing to a daily high of 3730.00 before trading sideways to lower into the close and eventually settling at 3715.75, up 24.50 handles or +0.67% on a total volume of a modest 1.35 million. In terms of price action, it was all about buying the open and midmorning pullback and covering at the afternoon high just after 1:30.
Democrats Move To Control Senate
Thank god I traded it better than I called it yesterday. I sold 3712s after the open but I complicated the trade by selling the NQ that initially rallied. After a few trades, I switched my focus over to the commodities. A few weeks back I bought a few bean call spreads and on one of the spreads I covered the short 14.00 calls and stayed long on the 13.00s. At one point the March beans (ZSH1:CBOT) were up 55 cents and settled up 37.4 cents at 13.50’4. My other bean spreads did very well also.
Over the first two sessions of the year, the ETFs and mutual funds have bought over $5 billion in stock on the close. Is that normal? Yes, it is. Many stock investment funds have money to put to work in the stock market over the first five days of the year. Today will make it the third session. That said, the markets powered higher after early declines on Monday and Tuesday and you can bet it was all part of the ‘guys with the better seats’ plan. My guess is we will see something similar today.
Last night Democrat Raphael Warnock defeated incumbent Republican Kelly Loeffler in a Georgia Senate runoff and the other race was too close to call. Initially, the ES rallied but as more results were tallied the futures declined. At 4:30am ET the ES was trading 3701.25, down 17 handles.
The other Georgia senate race shows the Democratic candidate up by 1% but that is not the only thing cooking today. The ongoing Trump March in Washington which has turned very violent continues and the House and Senate convene in a joint session to count the electoral votes with a dozen Senate Republicans and at least 50 House Republicans set to object to the counting of electoral votes from states that President Donald Trump contested after Election Day. No Democrats are expected to object to the results.
Our view, Globex has a 52-handle range. My guess is there is going to be a high level of headline risk. Our lean, sell the early rallies and buy the mid-morning pullbacks. I’ll worry about the afternoon trade later.
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.
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