Market Review
PTG 3 Day Cycle (a.k.a. Taylor Trading Technique)
Author: David D Dube (a.k.a PTGDavid)
Tuesday’s Session was Cycle Day 3 (CD3): Textbook CD3 as price pushed above PH and fulfilled Penetration Targets before reversing back below PH, setting the stage for the decline during RTH. Range was 30 handles on 919k contracts exchanged. Three-Fourths of Contract Roll is complete.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1 (CD1): Average Decline which began in CD3 is in place at 4230. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4230, initially targets 4245 – 4250 zone.
2.) Price sustains an offer below 4230, initially targets 4218 – 4213 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistic covering 12 years of recorded tracking history.
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 1 (CD1)
Thanks for reading,
PTGDavid
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Chart of the Day
Options on U.S. stocks, indexes point to one-side market
“Running of the bulls” has come to dominate trading in U.S. stocks and equity indexes, according to Julian Emanuel, head of equity and derivatives strategy at BTIG LLC. Emanuel cited a ratio between put and call options, based on 10-day average volume, in a report Sunday. The ratio declines as optimism rises, and vice versa. Last week, the indicator fell below 0.5 for the first time since July 2000, according to data compiled by Bloomberg. “Bullish sentiment may have become extended,” Emanuel wrote.
Our View
Will The S&P Take A Breather During The Fed’s Two-Day Meeting?
The ESU traded up to 4258.25 and the ESM traded up to 4267.50, with the latter meeting my 4265 objective on Tuesday. After the opening prints, the ESU did exactly what it has done for 14 of the last 16 sessions: It sold off.
The move sent it down to 4228.25 at 11:42 ET, where it bottomed. After the low, the ES rallied 14 points up to 4242.50, then sold off 10 points down to 4232.50 at 3:39. On the 3:50 cash imbalance, the ES traded 4236.00 and settled half a point higher on the 4:15 futures close, down 9.25 points or 0.22% on the day.
In terms of the ES’s overall tone, it was all about selling the open and holding short all day. In terms of the day’s overall trade, 1.65 million ESU futures traded.
As I tried to explain in the MrTopStep chat early yesterday morning, the ES has run most of the buy stops over the past week and is now overextended. Further, a majority of the stops are now starting to build up on the downside. Once the NQ rally failed, the ES labored to the downside.
The Fed’s April minutes showed officials are inching toward a conversation about weaning support for the economy. While most policymakers agreed they need to see “substantial” further progress toward their goals of inflation and full employment, a “number” of officials said that “if the economy continued to make rapid progress toward the committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases.”
In other words, the Fed should keep its easy-money policy going. However, let’s see if the Fed’s wording changes in its statement and creates some volatility over the next few days. Don’t forget, the algos love to run wild on Fed days.
Our view: The S&P took a breather yesterday, inching slightly lower. I am not surprised by that at all — in fact I was hoping for a harder move south, which we may get today. My feeling is we are in for another down day. Our lean is to sell the early rallies and wait for the Fed’s announcement at 2:00. My guess is there are more sell stops to run.
As we all know, there’s no crystal ball when it comes to trading stocks, options or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk free for 30 days.
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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