Market Review
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!
They are not just giving up that 4260 handle. At least not yesterday’s RTE. Three tries and it still held! I guess they need volume to push it through? And that they did not have, it was the lowest of the week if not the year. Not even TSLA showboating at the highs on crypto’s bullish news could get the younger bulls into the fray. MCD and NKE, and V had an opening bulge then sold off the rest of the day.
Among the tech titans, AAPL looked the weakest. This does not bode well for a bullish story. Around lunch SLOG they started to throw up the laggards; CAT, BRK.A, and KO to get them in to play.
I made a 32-minute video that steps you through the day minute by minute showing you how Wednesday (Jun-23) sealed each turn window for the S4H day. It also shows how, when the up move falters, supply overcomes demand. Give it a look-see and let me know what you think.
https://my.demio.com/ref/sVCpO9T2WR40cGv0
Market Timing: This is the kind of day when we see what price has in mind or just go fishing as WB would say. The market traded in a tight 10-handle nothing-burger day. VIX was at 15 before the open and it showed.
Weekly: Still holding gains from current week highs. Will need to see if price can expand on increasing volume or just upthrust and fail. Volume is the lowest of all the week and today is the last day of the week.
Daily: Lowest volume of all days. Trading at the high of Jun-15. Unable to take it out.
Technical Position: Gap up held on low volume. There is nothing strong about this. Today will need to accelerate the hod on increased volume to go higher or fall through the lod on increased volume to go lower. Anything else is a failed upthrust or a spring. Will need to wait and see the price behavior for the next move. Trading at the highs on low volume with decreased range indicates weakness.
GLOBEX: After the third test HOD, price closed weak. Globex quickly took price up to a new high. I had 4264 (see chart above) and drifted down to find a bid at 4257 handle. Price rallies again to test 4264 and finds supply. Currently trading 4259 handle and falling. These levels could change as we near the opening bell.
Looking Forward Friday, June 25, 2021
Bullish Anticipation: Opening drive down could test the 4252 down to 4248 or lower. Expect to see a bid coming in at Wholesale prices.
Bearish Anticipation: Bulge up could see supply at the 4264 up to 4274 or higher handle. These are all time highs and mathematical only.
Trade Plan: If we go with S2L, expect to see the low of day around 10:30 plus or minus 18 minutes. If price is to put on a new leg up this would be the ideal time in the cycle. You could see drift another hour down to the PEON close.
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Chart of the Day
Purest U.S. growth, value stocks are going separate ways
Shares of the fastest-growing U.S. companies have stopped moving in lockstep with the cheapest stocks for a change. The shift is evident from the correlation between the S&P 500 Pure Growth and Pure Value indexes during the past 200 trading days. Tuesday’s reading of 0.266 was the lowest since October 2000, according to data compiled by Bloomberg. The correlation plummeted after setting an eight-year high of 0.938 in April 2020.
Our View
Early Rebalancing Helps Push The S&P To New All-Time Highs
The truth be told, the Russell 2000 Reconstruction is not traded in the final half hour of the day. There is no way to rebalance over $11 trillion in Russell indexes in that short a time. The actual rebalance takes several days to do but the big volume prints come in the final minutes of the day on Friday. You will actually ‘feel’ the volume printing. It’s something that’s hard to forget.
Billions and billions of dollars in stocks will be printing and it’s all seamless. Before 3:00, MrTopStep will get an early look at what should be a “very large buy imbalance.” Depending on where the futures are trading late in the day, there could be a move up, but in most cases the big buys get paired off. I do not have the Russell 2000 cash quotes but if you do, write down the Russell’s total volume at 3:30 ET and write down what it is at 4:01, you will be surprised at the jump.
Yesterday the ES opened higher at 4255.00, rallied up to the 4258 level and then sold off down to 4252.50 just after 10:00.
From there the ES rallied all the way up to 4260.50 and put in a double top at 10:45, then pulled back down to a higher low at the 4251.00 area at 11:45. The ES then bounced up to a new high by 1 tick at 4260.75 and sold off down to another higher low at 4253.00 and then went back up to the high at 4260.75 at 2:40. The next move was a 7-point drop down to 4254.00. The ES traded 4257.50 as the 3:50 cash imbalance came out showing $165 million to buy then flipped to over $500 million to buy. On the 4:00 cash close, the ES traded 4256.50 and settled at 4258.50 on the 4:15 futures close, up 25 points or 0.60%. The Nasdaq futures settled at 14,355.50, up 81 points or +0.57% on the day.
In the end it was a low volume, choppy session that made new highs early in the day and again at the end of the day. In terms of the day’s overall tone, the ES was ‘firm’ all day. In terms of the day’s overall trade, volume was LOW. 172k ES traded on Globex and 674k on the day session for a grand total of 844k contracts traded.
I have to point this out now: If volume is under 850k contracts now, how low will it be in the middle of July or early August? My guess is this summer sees historically low volumes across the board.
Our View: It’s really hard to be long at new all-time contract highs. Part of not fighting the FED is buying the dips. Like I have always said, we are not here to fight city hall, if the ES is going up I want to go for the ride. Today is the famed Russell 2000 rebalance, a process that takes several weeks to lead up to. Like I said before, it’s not something that is completed in the final minutes of the day. It takes time to rotate through this much money.
My guess is the markets are busy for the first and last hour, which could favor a late day RIP if we see a big late day buy imbalance. 4280 ON TAP!
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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