The ES opened Friday’s regular sessions at 4452, ultimately dipped to 4445 in the opening 30 minutes, but reversed hard and rallied to a high of 4457. This was a day for the bulls and even though it was the third day within a strong rally already, buyers weren’t going to have it any other way.
From 7 a.m. on the ES put together eight straight hourly gains and rallied in 9 of the 10 hourly candles into the close. The lone “down” candle was a 0.25 decline in the 3:00 p.m. window. While the ~34 handle gain on the day seemed minor compared to the 1.7% gain on Thursday, it was an impressive session for the bulls — especially given the fact that it was an Opex day.
The ES hit a high of 4467 in the afternoon and went out just a few points lower, closing at 4463.25 at 4:00 p.m. and settling at 4465.25 at 5:00 p.m.
In terms of the ES’s overall tone, it was firm all day. In terms of the ES’s overall trade, volume was lower at 1.18 million.
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Baxter is our new AI trading helper. This data is early, new, and not very well tested but we want to share some of our findings. We are concentrating on the SP500 which should benefit ES futures and SPY traders.
Baxter is not able to make a decisive call on either the high or the low. He is predicting the low will most likely bookend at either the open 30 minutes or closing 30 minutes. The high most likely some time in between. That is a pretty open call.
Chart of the Day
Dow average’s most costly stock fails to carry its weight
While UnitedHealth Group Inc.’s third-quarter results were well received Thursday, the insurer has yet to pull its weight in the Dow Jones Industrial Average this year. UnitedHealth is the only stock in the price-weighted average to trade at more than $400 a share, according to data compiled by Bloomberg. Thursday’s close was $420.36, reflecting an earnings-driven gain of 4.2%. Even so, it’s only the fourth-largest contributor to the Dow’s 14% advance this year. Goldman Sachs Group Inc., Home Depot Inc. and Microsoft Corp., in that order, are the biggest.
This week has a lot of big companies reporting third-quarter earnings. IBM (NYSE:IBM), Johnson & Johnson (NYSE:JNJ), Netflix (NASDAQ:NFLX), Tesla (NASDAQ:TSLA), AT&T (NYSE:T), and American Express (NYSE:AXP) are just a few of them. My guess is that earnings will continue to support the rally. According to the Ned Davis stats, the Monday after October options expiration has been up 22/ down 15 of the last 27 occasions and the Nasdaq has also been up 22/down 15 of the last 27. The stats worked well last week and while I still think higher prices are coming, my gut tells me today may not be as easy as the last 3 days. Why? Because I’m not 100% sure ‘Scary October’ is over.
Our Lean: Ideally I would like to sell a gap-up open or an early rally and buy the pullback. If that works, avoid the midday CHOP and come back after 2:00 and try and get a feel for the last hour. The ES has run a ton of buy and sell stops, so a nice little flush would be good for the bulls.
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.
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