Last week for the OP, I wrote “If the [ESZ20] 3440s are cleared, then the 3470s should be tested. After the 3470s, the 3576.50 all-time high is the target although it would be a stretch for the bulls to reach this week.” This is exactly how the ESZ20 played out. The 3440s resistance area held Tuesday & Wednesday’s highs, followed by the 3470s holding Friday’s high before a blastoff towards the 3576.50 back-adjusted all-time high but did not quite reach it on Monday.
The 3276.50 area is certainly the next target and at a minimum, a probe beyond is expected once reached. If the bulls cannot reach 3276.50 this week, then that is a high failure and a very bearish signal. Expect the 3470s previous resistance to become short-term support although I do not expect the support to be strong. The former 3420-3240s resistance should become strong support if the current rally fails this week.
A new support has unfolded in the 3330-3332s area. Below there, the structural supports remain the same as previous weeks: 3290-3300s, and the 3200s area.
The ESZ20 continues its the strong uptrend as easily seen by the upward sloping 50-day and 200-day moving averages on the chart below. Volatility remains elevated with the ESZ20 5-day average range rising slightly to over 67 points from last week’s 64 points.
Third quarter earnings season kicks off on Tuesday with marquee big banks like JPMorgan Chase (JPM), Citigroup ( C ), Bank of America (BAC), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS) all reporting this week. Other companies reporting this week include Johnson & Johnson (JNJ), Delta Airlines (DAL), United Airlines (UAL), UnitedHealth (UNH), and BlackRock (BLK). If the earnings trend of beating lowered expectations continues, the bulls should have plenty of fuel to send the ESZ20 into new all-time highs.
Below is a snap of the ESZ20 daily chart with the above support and resistance numbers marked for reference. Thanks again for reading. For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com
In the Tradechat Room
At 14:50 we watched the MIM flip and then grow continuously negative. We love these stealth MiMs that build consistent toward a big number. By 15:00 we had a tradable signal when price was at 3538 and the sell-off into the reveal was a decent 14-point move. The 15:50 was a nice 3.3B sell.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
It is Tuesday so time for our weekly election review of some of the swing states. COVID is definitely on the ballot and these three swing states are all seeing rising cases so it is not clear how a ‘take off your masks and go to work’ rally cry works.
To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.
Wear your masks!
Take your Vitamin D!
Chart of the Day
|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3500.00||Opening Print: 3496.75|
|Low: 3464.25||High 3541.00|
|Volume: 245,000||Low: 3491.75|
|ES Settlement 3534.25|
|Total Volume 1.34 M|
S&P 500 RECAP – Trade Date 10/12/ 2020
S&P 500 Futures: Second Highest All Time Close
After a sideways 35.75 handle overnight range pushing up to 3500.00, the S&P 500 futures opened Monday’s cash session at 3496.75, up 23.25 handles and then traded down to the low of day of 3491.75 before 9:00 CT. There it attracted buyers that would push the index futures up throughout the morning making a 3534.00 morning high just before noon.
Following a shallow noon low of 3526.50, the S&Ps once again rallied up to 3541.00, marking the high of day just after 1:00 and then reversed late in the day as the index futures sold off with the ES printing an afternoon low of 3522.75 at the 3:00 cash close before settling the day at 3534.25, up 61.00 handles or +1.76%.
In terms of price action, it was all about buying the low made in the opening minutes and holding into the early afternoon high. As far as volume, it was another lite day with 1.34 million contracts traded.
Mutual Fund Monday Vs. The Wall Of Worry
Despite yesterday’s ‘huge’ rally, many big-name stocks made lower highs from the big rally in August. The other part, the VIX closed up on the day. While I know I have been discounting a big October drop I think it’s important to remember the days and weeks leading up to the October 1987 crash. At the end of September 1987, the S&P sold off sharply then rallied at the beginning of October then CRASHED on October 19, 1987—known as Black Monday. I know things are different today than back then but there is a high level of uncertainty surrounding the US stock markets, mainly the resurgence of COVID19, the presidential elections, and job growth.
Our view, the markets can run but they cannot hide. Can the ES and NQ continue higher? I guess but after a 291 handle rally in the last 13 trading sessions, I think there is reason to be concerned. Our lean for today is to sell the rallies. The ES is overdone short term.
Market Vitals Technical Analysis
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As always, please use protective buy and sell stops when trading futures and options.
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