Tuesday’s Session was Cycle Day 2 (CD2): Price consolidation during Globex Session led to continuation rally during RTH Session fulfilling CD2 Penetration Objective. Late day profit-taking pushed price to close near Value Area Low (3871). Range was 75 handles on 1.627M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Cycle Targets have been fulfilled, so as such the decline can begin at any time. We’ll mark today as a “wild-card”, as price is free to move in any direction. As such, there are two estimated scenarios to consider for today’s trading.
Surprise, Surprise, Surprise! A Gomer Pyle MiM. Early MIM was signalling a small buy but the 15:50 locked down reveal came in at a nice 3B to sell with Naz stocks leading the way. Apple, Microsoft, Amazon, Facebook, amd Tesla owned the bottom of the list with big sell imbalances. There is profit-taking afoot.
We also saw a lot of program selling on Spygate and fired off dozens of short programs between 13:00 and 14:00 ET as the market failed to establish prices above the 3900 level. At the end of the day we sniffed out 83 buy programs compared to 112 sell programs. Total value of the trades was 25B with a net short direction of 1.3B.
While the US and most of western Europe have falling covid related deaths, Eastern Europe, Czechia, Hungary and Slovakia are struggling with increasing deaths.
New daily cases also continue to rise in the Eastern European region.
Wear your masks! Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line) Stay home! Take your Vitamin D!
Chart of the Day
Higher interest rates are a hurdle that U.S. stocks have historically overcome, according to LPL Financial LLC. The firm cited the S&P 500 Index’s track record during periods of rising 10-year Treasury note yields in a report Monday. LPL looked at 13 periods since the 1960s in which the 10-year yield increased at least 1 1/2 percentage points. During these periods, lasting about 27 months on average, the S&P 500 recorded an average gain of 15% even though it fell three times. “Rising rates are usually bullish for stocks,” strategists Barry Gilbert and Lawrence Gillum wrote in the report.
(ESH20:CME) GLOBEX Session
(ESH20:CME) Day Session
Opening Print: 3860.75
Total Volume 1.6M
S&P 500 futures Recap – Trade Date March 9, 2021
S&P 500 Futures: NQ With The Best Day Since November
After trading in a 39.25-handle overnight range, the S&P 500 futures opened Tuesday’s regular trading hours at 3860.75 and would trade the daily low of 3855.25 in the opening ten minutes. From there buyers came in, pushing the equity indexes higher throughout the morning into the noon hour, eventually hitting the daily high of 3901.25 just before 1 p.m. CT, a 46-handle move off the morning low. The afternoon would turn pessimistic as the S&P index pared its gains, selling down to an afternoon low of 3870.00 before settling at 3870.50, up 41.00 handles on total volume of a solid 1.6 million contracts traded. In terms of price action, it was all about buying the open and then reversing at 1:00. The ESH found resistance at the 3900 area where buyers also resisted last Tuesday. As for the Nasdaq, it closed higher by nearly 500 points, or 4%, enjoying its best day since November.
Tesla Had Its Best Day Since February 3rd
As I have said many times, the stock market has good days and bad days, but yesterday was an exceptional day. While Bitcoin was breaking the 55,000 level, the index futures markets, the S&P (ESH21:CME), Nasdaq (NDH21:CME), Dow futures (YMH21:CBOT), and Russell2000 (RTYH21:CME) were already sharply higher as the new bellwether in the S&P, TESLA (TSLA), was roaring higher. When I used to do the PitBull’s S&P 500 futures business on the floor, (IBM) and (GE) were the bellwethers, but those days are long past.
After a 3-week decline that pushed the Nasdaq into correction territory, the buyers started showing up late last week and into Monday but the ES sold off 40 handles going into the close and short covered slightly before the bell and then started moving up on Globex Monday night. The ES opened sharply higher on Tuesday at the 8:30 CT future open, had a small pullback and then took off as TSLA jumped 50.00 points and continued to rise, taking the S&P for the ride. Late in the day, TSLA was up over 100.00 and up 125.00 after the close.
The moral of the story is TESLA is now the new IBM of the S&P and will have great sway over the index markets going forward.
Our View, the bond auction will also have great sway over the index markets today. While I think the ES is on its way to new highs, the markets are so volatile it could change in a minute. The VIX closed at 31.70 last Thursday and traded down to 22.90 yesterday, down 5.65%. Our lean, I’ll be honest, despite writing that the markets were going up yesterday I missed the long and tried to buy the late-day pullback and got smoked. Most days I have a good feel for what’s going to happen but I don’t know how the bond auction will impact the direction. My guess is it’s up and down and all around! If the ES gaps higher tomorrow I may sell into it but beyond that, I need to get a look at the price action.
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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