***Written 8pm Tuesday evening for Wednesday’s trading
Tuesday’s Session wasCycle Day 2 (CD2): Taylor Textbook CD2 “normal” as price consolidated throughout the session, setting near the midpoint at the close of trading. Range was 40.75 handles on 1.155M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us intoCycle Day 3 (CD3): Cycle Statistics have been fulfilled, so we’ll mark this day as a “wild-card’. Meaning that price has additional room to rally for extended targets, but should price fail to Clear & Convert CD2 High, then potential exists for decline to unfold. As such, there are two estimated scenarios to consider for today’s trading.
The MiM was showing a non-consequential buy into the 15:50 Reveal which turned out to be 300M to the buy side with no lean. At 15:55 the dquotes sold into the MOC. Price action mimiced the dquotes with a total closing move to the down side of just shy of 14 points. Closes are very volatile.
Today we look at Europe to get a sense of what is happening around the world. Portugal and Spain are in a spike while the US, the UK, and Ireland have managed to come back down, still all clustered higher than Germany and Canada. Japan and India are doing great and Australia is nearly 0 now at 0.2 new cases per 1 million people.
Wear your masks! Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line) Stay home! Take your Vitamin D!
(ESH20:CME) GLOBEX Session
(ESH20:CME) Day Session
Opening Print: 3858.25
Total Volume 1.15 M
S&P 500 Futures Recap – Trade Date January 26, 2021
No Traction Tuesday
After trading in a 37.75-handle overnight range, the S&P 500 futures opened Tuesday’s cash session at 3858.25 and traded to an early morning daily high of 3862.20 just after the open and reversed to sell down to the daily low of 3840.00 just before 11:00 CT. From there, buyers came in pushing the index futures higher for the rest of the morning, through the noon hour and into the afternoon making an afternoon high of 3854.00 before selling in the final hour retested the 3840.00 low before rallying to settle at 3851.00, up 2.50 handles on modest volume of 1.15 million contracts. In terms of price action, it was all about selling the open and then buying the midmorning low holding into late day.
Stock market rotations have always been part of trading but they have become much more pronounced since the Covid-19 outbreak almost ten and a half months ago. Selling big-cap stock to buy smaller cap stocks or vice versa, these rotations happen every minute of every day. When it comes to futures trading, if you’re lucky enough to to choose the correct index it can make your job a lot easier and if you don’t… it can be painful. The problem? What’s hot today isn’t necessarily going to be hot tomorrow. For my own good, I do my best to keep track of this rotation sensation!
Our view, its 6:00 am and the Dow and S&P are trading lower and the Nasdaq is higher due to yesterday’s tech earnings coming in better than expected. There is little doubt the markets are overvalued but with rates at zero, there really is no place to invest but stocks. That said, if you take out the tech stocks the S&P and Dow do not act all that great. Our lean, today is day two of the Fed’s two-day meeting. There are so many cross-currents I want to get a look at the price action before jumping in. I may buy the open or early dip but just for a scalp with a tight stop.
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.