Market Review
I must say I’m taken back by this new reality. Adam Levine got a new leg tattoo and Jay Leno is apologizing for his past transgressions. There is a black hole image in space and a big asteroid just flew by this weekend. And they are promising to release some more info on UFOs seen in the next few weeks.
Then to top it off: Massive ‘space hurricane’ captured spinning over Earth for the first time. And that’s just yesterday morning’s BING search page… Something wants our attention diverted off of this planet. Not on this planet, especially this country…
And yes, they are voting to change the election laws via HR-1 / S-1 for all the states and circuit court nine has found a way to bypass amendment two. But that’s not news of course.
I say this to reinforce the fact that they are selling! I’ve been screaming it and preaching it to the choir for weeks. They say bonds are more attractive than tech. Where are the Reddit guy/girls/folks/traders when you need them?
There is uncertainty in the market. The boarder wall, we need no stinking border wall!
How can America shine and the Market sour with all this transformation going on?
Yesterday there was talk of shifting $88 Billion out of equities into, wait for it… BONDS. Another fund upwards of $100 BILLION! And that was the 25th when they normally shift.
CASH / EMINI opened up 20 points gap down and price was quick to find a morning low at the 3860 handle. Then ripped up to the 3870 (I had the 3869 as a level) for 5-point rotation. After testing the 3870 twice, the price ripped down to find the 3856 (I had the 3855). It was an S2H day so I was expecting the AM peak as high. Price did not disappoint. Rallied up to the 3876 for a 20-point run.
Price then found itself in a downtrend channel where about 10:45 a precipitate pace of the decline developed into a sold out / oversold technical condition where shares traded hands from weak to strong. And you guessed it, price ripped back up to the opening print where a steep pitch of rise created an overbought condition, inducing a 50% (normal) technical reaction from 3867 to 3854 handle.
A series of higher highs and higher lows bought price back. Evidently, supply had been disposed of, as the activity shrank due to few offers taken at the previous high of day. By 12:00 price had pushed up to the 3875 handle. And at 13:15 the 3890 handle. At 13:45 a temporary distribution zone was seen on a one point and figure chart indicating an 18 point decline due to cause and effect.
By 14:00 price was working out the apex of this decline and by 14:30 some bag holding at the (3872 = 3890 – 18 pts cause) handle and at the 3877 handle the supply line penetrated as the downward stride was broken. The rally signal was confirmed by increasing volume on the breakthrough.
Yea, it felt good to see our old friend 3900 big even in our sights as the 15:00 (three o’clock) hour approached. The clock is not in sync yet. So, this day may have flipped. Settle was confirmed with a 3906 handle. And yes, I did say in the PROS and NUMBASH they would probably move the market back up due to the speech someone was making…
If you saw the speech today you saw my father in the last years of his life. And the market saw it too!
Looking Forward Friday, March 26, 2021
Globex has drifted higher up to 3920 handle. News is: Personal Income and Outlays & Retail Inventories & Wholesale Inventories at 8:30, Consumer Sentiment at 10:00 AM ET. The question is, will it move the needle North or South?
Was the 10:45 to 11:00 marker the low? The 3931, 3938, and 3944 handles are the past three Highs of days. If price can get past those levels it’s blue sky all the way up to the 3978 handle. From 14:00 to 14:15 marker price traded in an apex. The move down to 14:30 (dip) was the lowest activity of the day.
By my eye, I saw a tremendous volume come in as the supply line was annihilated as the 3877 handle was taken out.
CME Group reported 2,250,189 as volume yesterday. That’s twice the double of a normal day. Providing PEONS do not get over their skis, and NY CITY CASH accepts the opening print as value, you could see higher highs today.
I give you the best of the old school market technicians, JP Morgan, Herriman, Kearn, and Livermore. The traders of the 1930s. How they may have seen the market. I use the lens of Richard D. Wyckoff Principles and Procedures and through the eyes of WB’s hidden internal clock. The clock that controls all turns intraday every day.
We had a good week this week. Our subscribers have been very lucky with the levels given: Broke even Monday, 6 points Tuesday, 22 points Wednesday, and 26 points Thursday. Total for the week 54 points, which would be $2,700 on 1 lot and $8,100 on 3 lots. That’s due to the volatility that crept back into the market. I’ll be the first to say, it does NOT happen every week. When it does it’s a beautiful thing!
I would love for you to join us. If you have not taken the time, now would be a great time for you to subscribe. After you subscribe drop me an email at trader@wyckoffamtrader.com we’ll set up a time to talk and help you discover how using
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Chart of the Day
Warren Buffett is widely quoted as saying: “The stock market is a device for transferring money from the impatient to the patient.” His investment in the four largest U.S. airlines through Berkshire Hathaway Inc. now appears to be one of those transfers. American Airlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co. and United Airlines Holdings Inc. have doubled on average since Buffett disclosed last May that his company no longer owned shares. All of them except American are back above their price in mid-2016, just before Berkshire started building its stakes.
Our View
GLOBEX
NYSE Imbalance – Buy $3.6 Billion
The S&P futures were well on their way to being down 5 of the last 6 sessions yesterday but the boys with the better seats had a different plan, buy $3.6 billion on the 3:50 ET imbalance. I’m going to skip the economic reports and net changes to talk about how rotations and imbalances work together.
As we all know, stock market rotations have become more prevalent than ever and it’s my belief that Covid19 is responsible for the surge. The first mega rotation was during the early stages of the pandemic when the Dow Jones Industrial Average (DJIA) plunged 6,400 points or 26%. March 4th and March 11th, 2020, the S&P 500 index dropped 12% into a bear market. On March 12, the S&P 500 plunged 9.5%, its steepest one-day fall since 1987. And the most beat-up during that time frame was the Nasdaq that fell over 30%. As money moved away from traditional stock holdings the big investment firms poured money into the technology sector and the stay-at-home stocks. From its Covid19 2020 lows to its new all-time 2021 contract high, the Nasdaq gained 109%. In 2021 as the economy started to open up the next big rotation was out of tech and into the Russell 2000 or into small-cap stocks. As the technology selling accelerated lower over the last 6 weeks and bond yields rose, money was rotated into the Dow. That all said, ‘rotations’ have become a daily occurrence. How the ETFs choose what sectors to move into is based on daily inflows and outflows which you can see during the day but I firmly believe that the late-day imbalances are where it becomes extremely visible. Wednesday, the 2:50 cash imbalance was $2.5 billion to sell and yesterday it was $3.6 billion to buy. This is where the guys with the better seats excel. Take yesterday’s trade for an example, the ES sold off 100 points from Monday’s 3944 high to yesterday’s 3843.25 low and rallied 66 handles and out comes the big buy imbalance. The S&P and Nasdaq rallied before the imbalance was released and then dropped right after. Why? Because the boys with the better seat were buying all day and when the $3.6 billion to buy showed up they took some profits into it.
In the end, the MIM has become one of the only tools available to retail traders to read the close. The MIM is now being viewed and shared by thousands of people. While some may doubt that, I know for a fact that it’s shared across Twitter and is looked at by major institutions and hedge funds. Is it perfect all the time? No, but following the rotations and paying attention to the imbalances is a good way to see how money is moved around.
Our view, it’s 11:15 PM and the ES just made a new high at 3916, up 8.75 handles and the NQM just traded 12833.25. Our lean, I think we see higher prices but you have to keep an eye on the bonds. Sell the early rallies and buy the pullbacks. If the ES is at or near its highs after 2:30 an NHOTC could be in order.
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.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS
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