The ESZ20 continues its relentless march higher on economic stimulus and coronavirus vaccine hopes even though US coronavirus cases are surging as we start to see the impact of Thanksgiving holiday gatherings. The virus hospitalization rate is about 6%. The US saw over 1 million new coronavirus cases last week equating to over 60 thousand new hospitalizations where many hospitals are critical on their Covid-19 beds.
Pfizer’s vaccine will be the first to be approved but they face a massive distribution problem since their vaccine needs to be kept at -70 degrees Celsius, much colder than standard freezer equipment. Moderna’s vaccine will likely become the more widely distributed vaccine. In either case, we are looking at June or beyond before large segments of the population can be vaccinated. State and local governments are entertaining another round of lockdowns which sooner or later will lead to another market selloff. In the meantime, the ESZ20 continues to post new highs.
From a technical perspective, the ESZ20 remains in a short-term, intermediate term, and long-term uptrend. On the ESZ20 daily profile, volume above 3400 shows that the ESZ20 could entertain a pullback to work the area between 3400 and 3700. This would be normal market action.
Volatility continues to shrink as the ESZ20 pushes higher. The ESZ20 average daily range has shrunk to 36 points from 47 points last Monday. Structural support and resistance remain similar to last week:
Resistance Areas (above):
Support Areas (below):
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
Even a decent MOC to sell couldn’t sink this Molly Brown of a market. A small sell early never developed any symbol lean once side of the other, in fact at the MOC 15:50 revea there were more symbols with buy imbalances than sells. The market traded in a 4 point range through the close.
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Cases continue to rise as do hospitializations and deaths. So far I have not seen any “Thanksgiving” acceleration and it will be hard to seperate out for another week. Even this chart is going to take another week. Thanksgiving week was incorrect for data. The week after over-corrected. This week should give us our first clean 7 day average and this chart above is comparing week to week so it will take another week to see this data correctly. Bad data ripples through and the press doesn’t get it or report about the damage was done by missing two weeks of reliable. It is a bigger failure than people gathering.
Wear your masks!
Take your Vitamin D!
Chart of the Day
GMTT – Chart of the Day – Euro – Dec 8, 2020
The chart of the day is the Euro. A huge move up from the Nov 4th level at 1.1600. The question is high much higher the Euro will trade before hitting a high.
We think that the Euro will get difficult to move much above 1.2220. The Euro trades now around 1.2124. Trading suggestion is to short the Euro with a buy stop at 1.2220. Short term we expect to see a pullback towards 1.1947.
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|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3705.00||Opening Print: 3690.50|
|Low: 3672.25||High 3696.50|
|Volume: 160,000||Low: 3677.50|
|ES Settlement 3689.75|
|Total Volume 1.0 M|
S&P 500 Futures: NQ At New All Time Highs While ES Trades Weak
After trading in a 32.75 handle overnight range, the S&P 500 futures opening Monday’s cash session at 3690.50, down three ticks, then traded to a morning low of 3688.50 before grinding slowly higher to the high of day of 3696.50 at 11:00 CT. From there the ES would roll over late in the morning and the selling would intensify early afternoon until the S&Ps printed an early afternoon low of 3678.75. Then after a ten handle bounce, the selling resumed on down to the daily low of 3677.50 at 2:45 before a late-day surge pushed the ESZ up to 3693.00.
The benchmark index futures would go on to settle at 3689.75, down 8.25 handles or -0.23% on total volume of just over one million contracts traded. In terms of price action, it was all about buying the open and then selling the late-morning high.
The ES has gone a long way in the last 6 weeks and seems to be tiring. After yesterday’s push above ES 3700, the futures seemed to lose some momentum. Late in the day the ES dropped 13 handles and rallied on the cash close and then quickly sold off again after Globex opened. I think this price action may set up lower prices today.
Our lean, the ES is overbought and overextended. Our lean is to sell the rallies with tight stops. That doesn’t mean we won’t try buying it but ideally, we think lower prices.
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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