Polaris Trading Group: Taylor 3 Day Cycle Commentary Author: David D Dube (PTGDavid)
***Written 8 pm Tuesday evening for Wednesday’s trading
Tuesday’s Session was Cycle Day 1 (CD1): Most of the session was of the moderately choppy variety, as it was an “inside-inside” value type day. Price did eventually decline to the projected CD1 Average Decline Target (3772) before rallying back fulfilling Average Rally Target (3792.75). Range was 38.75 handles on 1.195M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Part of this cycle’s rally is in place, so expectation is for potentially more consolidation activity before breaking out directionally. There are two estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 3800, initially targets 3810 – 3820 zone.
2.) Price sustains an offer below 3785, initially targets 3775 – 3770 zone.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet >> Cycle Day 2 (CD2)
Thanks for reading,
Polaris Trading Group
In the Tradechat Room
A billion to buy on the MOC yesterday and like the previous day, the trade was the 15:45 candle with an almost 5-point move. There was no real lean so more of a rotation than a direction.
Questions? Please email me: Marlin@mrtopstep.com
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From yesterday, the rising cases have dropped by 4 (yay) but falling daily cases have stayed the same (boo). Washington state has moved from falling to rising while Oregon is now in the falling category. Data is still very sensitive recovering from the data holidays.
Wear your masks!
Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line)
Take your Vitamin D!
Chart of The Day
|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3806.75||Opening Print: 3793.00|
|Low: 3786.00||High 3803.25|
|Volume: 175,000||Low: 3768.00|
|ES Settlement 3793.25|
|Total Volume 1.9 M|
S&P 500 Futures Recap – Trade Date January 12, 2021
RTY To New Highs While ES/NQ/YM Close Sideways
After trading in a 20.75 handle overnight range, the S&P 500 futures opened Tuesday’s cash session at 3793.00, traded down to an early morning low of 3781.50 at 8:45 and then rallied up to a 3803.25 daily high just after 10:00. From there, the S&Ps would reverse and sell-off down to the daily low of 3768.00 around 12:30. The futures would get a lift from there rallying to a lower afternoon high of 3799.50 late in the day before settling at 3793.25 up 1.25 handles on a total volume of 1.9 million. In terms of price action, it was all about buying the early morning low and selling the late morning high.
Ready The Next Leg Up
While there have been some sell-offs in the #ES and #NQ the last few days the weaker price action is tied to a big buy of Russell2000 and sell the Nasdaq, Dow and S&P rotation. That’s really how it works now. Rebalances are no longer about stocks and bonds, they are about what sectors to buy and what sectors to sell. There used to be a mutual fund called the “bull/bear’ fund where you could be bullish on stocks and flip to bearish but the current rotations are very sector orientated. Clearly, non-stop rotations are part of the new world trading order and are not going away. It’s something every trader needs to pay attention too, especially when you have so much over-investment in companies like FAANG.
I have learned a lot from the PitBull and continue to learn from him. His stock research is some of the best in the world. Had I bought the stocks on his list late March 2020 I literally could retire. The PitBull said yesterday that stocks ‘tend to go up in January and sell-off in February’. I agree with that but I also think it’s important to remember that ‘the trend is your friend’ and in an environment of zero borrow cost and ‘unlimited’ government stimulus it’s imperative to remain focused on the upside. The PitBull also warned about next week and the security risk tied to Biden being sworn in next Wednesday. To protect against any security threat the US military will have a larger footprint in the nation’s capital by this weekend than the total number of troops in Afghanistan and Iraq combined. That will include over 10.000 U.S. troops. I don’t think I have ever seen anything like that.
Our view, it has been a two-way trade but the #ES isn’t really ‘breaking’ and it’s 10:30 PM and the #ES is trading 3803. The way I read the price action is the ES and NQ are stuck in a big back and fill pattern and setting the stage for the next leg up. Is the S&P overextended? Yes, it is, but there is a ton of money still pouring into stocks and that is why the markets bend but don’t really sell off much. Our lean is for higher prices. You can sell the early rally and buy the pullback or just be patient, follow the trend, and buy the dips.
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.