Disclaimer: For educational use only. I’m not dispensing financial advice. We are having an intellectual conversation (you and I) on the topic of trading the Emin futures using the Lens of Wyckoff Principles and the Eyes of WB’s clock. The clock that controls all turns intraday, every day!
IMPRO: trader:(9:03:08 AM): seem like mkt intelligence desks comments consolidate range pretty accurate, people not going to step it up and make all time highs in the summer with taper risks, unless earnings step it up…. guess we will see some range chop for a bit as big boys in wait and see mode…. buyers don’t have to buy as TD puts it…
Weekly and Daily: Weekly had an upthrust from the previous week and failed. At least for now. Daily tested the lows of May 25-27 and found a bid. Could not maintain rally and closed weak. This indicates the potential for more downside pressure.
RTE: A bid could not hold this market. At least for the first 20 minutes or so. Price cut through established levels like butter. It was an opening drive down. Price quickly riped up to the opening print where after three tries it was quickly turned away from the 4184 handle as overwhelming supply proved more effectual. Price recovered the 4202 and closed weak.
Technical Position: After the oversold technical position from the opening print, price traded up and formed a potential re-distribution or resting spell for further upside action. This was confirmed as price took out the 4184 handle after a dip to the halfway reaction. From the low to the 10:55 pullback you can see a support line. As the hod was printed, price got overbought. Sideways broke the support line and the second test of the 4200 broke the trend line.
GLOBEX: Has taken CASH lead and traded down below the RTE open and found a bid. Price broke the uptrend line. As I write this price is 4186 trading down. Open was 4181 handle.
Looking Forward Friday, June 4, 2021
If we can shut the door to the aberrant day this is what may unfold:
Bullish Anticipation: Could see some glimmer of hope if they can hold the 4189 and change. Best is a rally on increasing volume up to test the 4202 and higher.
Bearish Anticipation: Need to get aggressive and hold the 4193 on the move down. Sure the lows of 4175 and then 4165 would build to the story.
Trade Plan: It’s all about those job numbers and can inflation be kept at bay. June 15 is also a spot on the calendar.
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Chart of the Day
S&P 500 Gain After Five Months Bodes Well for Next Seven
Further gains are due for the S&P 500 Index if history is any guide, according to Nautilus Research. The firm analyzed the index’s performance after rising 10% to 15% in the first five months of the year and presented the results in a Twitter post Tuesday. The S&P 500 climbed 11.9% this year through May and ended up within the range for the 11th time since 1950, according to data compiled by Bloomberg. All the earlier instances were followed by gains in June through December, which averaged 11.5%.
Tech Shares and Tesla Drag S&P Down
The S&P acted ‘fine’ in the early going of Wednesday night’s Globex session. After selling off late in the day the ES traded up to 4213.25 but at 8:06 AM the futures traded all the way down to 4169.50, 43.75 points off the evening high. The futures bounced a bit and traded 4181.00 on the 9:30 futures open and sold off down to a new low of 4165.25 at 9:51. After the low, the ES rallied up to 4184.00, pulled back down to 4175.00 at 10:48, and then a big buy program hit the ES pushing the ES all the way up to 4202.50. The ES rallied 27.5 points in 21 minutes. After a small pullback and some back and fill price action the ES popped up to a lower high of 4201.50. The ES started to weaken late in the day as the NQ reversed late, traded 4191.50 on the 3:50 cash imbalance, traded 4192.00 on the 4:00 cash close, and settled at 4191.50 on the 4:15 futures close, down 0.40% on the day while the NQ closed down 1%.
In terms of the ES’s overall tone, it was weak but the NQ was the weak link. Weak tech stocks kept a lid on the Nasdaq and TSLA weakness weighed on the S&P. In terms of the day’s overall trade, volume was higher at 1.36 million contracts traded. Am I surprised by the sell-off? Not really, with volume is so low it’s easy to move the index markets around.
Our view: I am not sure how this is going to play out but there is a very distinct pattern that shows up on jobs Friday and it’s called NHOTC (New Highs on the Close). MrTopStep Trading Rules 101 says on Jobs Friday you’re supposed to fade the open if there is high Globex volume. If the ES gaps down, you’re supposed to buy the open or the first drop after the open and if it gaps higher you are supposed to sell it. Ideally, the first scenario fits my trading plan better but sometimes the markets chop around the first hour then catch a bid. We shall see…
The index markets started out weak, had a big rally, and sold off again late on the day. We have had a good run with buying into the Wednesday/Thursday lows but it seems like too many people are playing the pattern. I do not think it will change much but it’s much more effective when volumes are higher.
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