There are no crystal balls when it comes to trading. No matter how good you are at trading or how good the newsletters you subscribe to work, they will never be the genie in the bottle you are looking for. As the PitBull says, ‘if you want to make the money you have to do the work’ and even then there are no guarantees. Only by trial and error will you learn.
After trading down to 4126.75 on Globex at 1:30 am Sunday night, the ESU21:CME rallied all the way up to 4177.25 at 5:30 AM and opened Monday’s regular session at 2174.00. After the open, the ES traded 4177.25 and then dropped down to 4165.75 at 9:42. I was very clear in the MrTopStep chat about what I was looking for. I even said last Friday that I hoped they would be down on Monday so I could buy the open. After the low, the ES took off. At 10:54 the ES traded 4208.00, 73.25 handles off the Globex low and 43 handles higher than the 4165.75 low. After some back and fill the ES traded up to the 4210 area at 11:51, pulled back a bit, and then traded up to 4217.75 at 2:03, 89 handles off the Globex low in 9 /12 hours.
After a small dip down to the 4209 area, the ES traded back up to 4215.25 going into 3:15. The ES traded 4213 as the 3:50 cash imbalance showed $1 billion to buy. On the 4:00 cash close, the ES traded 4214.25 and settled at 4219.00 (high for the day) on the 4:15 futures close, up 77.25 points or +1.87% on the day and traded up to 2219.75 in the after market. In terms of the ES’s overall tone, it was ‘extremely firm.’ In terms of the day’s overall trade, volume was high; 338,000 futures traded on Globex and 1.055M traded on the day session for a grand total of 1.393 million contracts traded.
It’s important to remember that 2.1 million people passed through TSA on Saturday. It’s the most travelers since before Covid19 hit. As the summer rolls on, I suspect more and more people across the U.S will be taking vacations. This could help give the MTS trading term ‘thin to win’ new meaning.
Our view: Fed Chairman Powell will testify on the economy today but I am not sure what he can say that he hasn’t already said. Yesterday the ES closed on the high tick of the day and traded up to 4219.75, taking back 92 points of a 137-point decline. It’s important to recognize the importance of the pattern that says ‘the ES can close lower 1 day and the ES can maybe close down 2 days in a row but down 3 in a row is hard to come by.’ Another MrTopStep rule to keep in mind today is ‘the ES tends to go sideways to down after a big rip.’ That does not mean the ES and NQ can’t go higher but yesterday’s rotation was buy everything (RTYU21:CMM + 2.36%), (YMU21:CBOT + 1.94%), and the (NQU21:CME + 0.73%). I really think keeping track of the rotations is important. Our lean, it’s very difficult for all the shorts to cover when the ES goes up so much so quickly. That said, our lean is to sell the early rallies and buy the pullbacks. The ES could be in need of some downside repair.
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