Market Review
Last week I wrote “If the 3330-3332s are reached this week, it is likely the area will be breached and the 3290-3300s will be tested.” Hmmm, that turned out to be an understatement. Renewed coronavirus fears changed trader expectations last Wednesday and the ESZ20 crashed through the 3290-3300s towards the next 3200s support area. Price bounced 25 points short of the next structural support area of 3200s. If the 3225 swing low holds, the intermediate-term uptrend remains intact and the bulls remain in control.
The ESZ20 has cleared its 50-day moving average to the downside, a clear indication the short-term trend turned down last week. Thus, the ESZ20 is in a state of mixed trends and reactions to this week’s events will determine the short-term direction. On the docket is the US elections today, a Fed announcement tomorrow and Employment numbers on Friday.
This week’s structural resistance and support for the ESZ20 are as follows:
Resistance Areas (above):
3496-3508s
3462-3470s
3400-3410s
3333-3340s
Support Areas (below):
3225-3243s
3198-3207s
3179-3185s
3094-3108s
Volatility rose last week and remains elevated. If the US presidential election is close, the ESZ20 could see volatility for weeks. If President Trump loses the election by a narrow margin, election volatility could drag on through January. Also, the coronavirus remains as a backdrop. US cases continue to rise with a record number of daily cases last Thursday which was broken on Friday. A coronavirus relief package seems like a distant memory, but once the elections are out of the way, maybe Congress and the White House can get back to work this week.
The 3200s remain key support and if cleared, we could see 3100 this week which currently aligns with the ESZ20’s 200-day moving average. It’s doubtful the ESZ20 will see new all-time highs until after a fifth coronavirus relief package.
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MiM
Our MiM 4 is getting ready to be released. It has much more data in the 15:50 until close area including the NQ. Our MiM 3 is NYSE only at this point and while there was a sell at 15:50 on the NYSE the NQ was much smaller and at the15:55 candle turned into an aggressive buy after the DQuotes came into bid on the close.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
Covid Corner:
Numbers today are from the US as this is our last election coverage, I think. Last week we discussed the USA entering a third wave which is more aggressive than the first two. We are now well past the summer wave and this “back to school” wave could soon hit 100K new cases a day. Based on our numbers last week we had made the following prediction:
Daily deaths are also showing a push higher and I would expect them to be between 950 and 1000 this time next week and show a real move higher.
Yet, here we are at 850 daily deaths lagging behind more than we thought and no real aggressive push higher. so we still see a slowing down in mortality from wave two. Last week we were at 830 new deaths. Likely we will push past that peak of 1,100 from August but we are doing it at a much slower pace.
These rises have lasted about one month for the spring wave and summer wave. Our current Back to School wave started around October 2nd so we would expect the top to be around here in new cases and this time next week we could start to see some real slowing showing up in our 7-day average.
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!
Stay home!
Take your Vitamin D!
Chart(s) of the Day
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GMTT / Crude (DEC) / Chart of the day / Nov 3 2020
Crude (DEC)
Crude reached our target of 33.80 and made a very nice bounce all the way to 38.22.
There is a very short term upside target of 40.45
A close below 37.01 gives a sell signal.
On another note as today are the US elections and all eyes are focused on the financial markets:
I’m not sure if Trump or Biden is good or bad for the market.
I think the market can be happy with either … market thinks
Biden will deliver bigger stimulus (good for market) but will also raise taxes (not so good).
The market wants certainty and the biggest risk is a contested election where the winner is not known for weeks or months.
GLOBEX
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3322.50 | Opening Print: 3302.00 |
| Low: 3243.25 | High 3323.50 |
| Volume:400,000 | Low: 3272.00.00 |
| ES Settlement 3271.75 | |
| Total Volume 1.8M |
S&P 500 Futures RECAP – Trade Date 11/2/2020
S&P 500 Futures: Bulls Own November’s Uneventful Open
After trading in a 69.25-handle overnight range leaning higher, the S&P 500 futures opened Monday’s regular hours at 3302.00, up 30.25 handles, and went on to print the morning low in the early minutes at 3289.25 before rallying to what would be the high of day of 3323.50 at 9:15 CT, a 34.25 handle rally from the low. From there the ES would top out and sell through the rest of the morning into the noon hour hitting the low of the day of 3372.00, a 51.50 handle swing at 1:00.
For the rest of the afternoon, the S&Ps would trade higher, making a late session high of 3306.25, 34.25 handles off the lows before settling the day at 3299.25, up 34.50 handles or +1.06% on total volume of 1.8 million.
In terms of the overall price action, it was a mixed day, with early morning and early afternoon benefiting. However, the biggest winner of the day was the mid-morning sellers.
OUR CALL
The Good, The Bad And The Ugly
While the polls are clearly favoring a Joe Biden win and Sam Stovall, chief investment strategist at research firm CFRA backs it up. Stovall says that when the S&P finished lower over the period of July 31 to Oct. 31 during a presidential election year, it isn’t a great sign for an incumbent presidential party to win. On the flip side, Stovall’s “presidential predictor” has found that when the S&P 500 has risen from July 31 to Oct. 31 going back to 1944, it typically corresponds to a presidential win by an incumbent party, while a decline in that three-month span signals a loss. As most of you know I came out publicly saying that President Trump would not get reelected after the first ‘presidential debate’. I often say this and I am going to use it again. I’m a street guy from the floor, you know, the CME trading floor, ‘the school of hard knocks’. I have four good friends that call me every day for my straight forward view on life, the markets, the election, and COVID19. They ask the same questions every day and get the same answers every day!! I want to keep this short but after coming back from Chicago ‘warning lights are still flashing in my head’. It was like stepping into another world. Cars on the streets? Sure, but not in the ‘loop’. Were people out? Yes, but they shut down inside dining and you can only sit outside and get deliveries. Get this, and this is really sad, the Palmer House, one of Chicago’s most beautiful hotels landmarks, the lobby is like a trip back to the 1940s. Gone!
There is no way, no matter what candidate wins, that things just get better. Chicago’s Michigan Avenue is boarded up. Large office buildings with only 10% returning to the office and even lower now. Thousands of beautifully built 40 and 50 story condos and rental properties. The buyers, mostly millennials that were making $200,000 a year or more that are now making nothing. How long will it last? Long after a COVID19 vaccine is found. Foreclosures all over the place and everything is shut down, how’s this going to work? How it works is people are going to lose their property. An even higher tax base will be placed on the already record-high Illinois taxes. This isn’t just in Chicago either, it spreads across the US from NY to LA. So whichever candidate you choose ‘buyer beware’.
Our view, over 1.45 million ES traded yesterday. That’s surprising, one would think volume would drop but with the VIX still above 37.00 it’s almost like the writing is on the wall. Our lean, there was a very well known trader that once told me ‘Danny, you trade up to the event but not the event’. My guess is we do see a slower trade day but it will be subject to the headlines. I think you play both sides if you can, sell the early rallies and buy the pullbacks. That doesn’t mean the ES will go straight up, it means two-way trade, ES moving both ways, small ES bids and offers.
Market Vitals Technical Analysis
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