Polaris Trading Group: 3 Day Cycle (a.k.a. Taylor Trading Technique)
Author: David D Dube (a.k.a. PTGDavid)
Website: http://polaristradinggroup.com/
Tuesday’s Session was Cycle Day 1 (CD1): Price continues to consolidate near all-time highs with sub-par range and volume. The BTFD Crowd remains active on any sign of weakness, as this cycle day’s decline was easily absorbed at 4420 – 4424 support zone. Range was 21.75 handles on 926k contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Five-Day Value Zone between 4420 – 4432 is the trader’s sandbox. Until either of these levels are broken, expectation is for more of the same, with Cycle Day 2 consolidation. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4432, initially targets 4448 – 4450 zone.
2.) Price sustains an offer below 4420, initially targets 4405 – 4400 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 2 (CD2)
Thanks for reading.
PTGDavid
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Baxter:
Monday trade on the ESU21 found a 15.21 range. The outside range for Baxter was 47.47 and neither bound was crossed. Bax is still bullish raising the upper limit and lower limit higher than yesterday.
Chart of the Day
Gold is anything but precious by comparison with S&P 500
Gold’s status as a precious metal is belied by its performance relative to U.S. stocks. Comparing the SPDR Gold Shares and SPDR S&P 500 exchange-traded funds shows as much. Monday’s ratio between the gold and stock ETFs was the lowest since September 2005, according to data compiled by Bloomberg. The ratio was down 44% from a March 2020 peak and off 78% from a record set 10 years ago this month. A similar comparison was made by Charlie Bilello, chief executive officer of Compound Capital Advisors, in a Twitter post Monday.
Market Review
The ES traded down to 4416.50 on Globex Monday night and opened Tuesday’s regular session at 4430.00, made an early low at 4426.00 at 09:42 ET and then traded up to a new all-time contract high at 4438.25 at 10:15. After the high the ES sold off about 16 points down to 4422.25 going into 11:00 and then slowly traded back up to a lower high at 4437.00 at 12:30. The ES then pulled back down to the 4431.00 area, made another lower high at 4434.75 and then pulled back down to the 4428.00 area at 2:23. The ES traded back up to a 4433.00 ‘double top” and then pulled back down to the 4429.50 area at 14:57. At 15:33 the ES traded 4434.25 as the MiM showed $150 million to buy. The ES traded 4427 as the 15:50 cash imbalance showed $195 million to buy and traded 4427.25 on the 16:00 cash close. After 16:00 the ES traded in a narrow range and settled at 4429.50 on the 17:00 futures close, up 3.75 points or +0.08% on the day.
In the end the S&P made its 45th record close. In terms of the overall tone it felt like the NQ weakness held into the ES in the later parts of the day. In terms of the day’s overall trade volume was slightly higher 931,000 contracts traded. The S&P has nearly doubled in price since the March 2020 Covid19 lows.
Our View: CPI Bull Market Deal Breaker ?
The S&P hasn’t had a 5% pullback since October, the longest respite since a span from June 2016 to early February 2018. The ES has not pulled back more than 20 points in the last few weeks and as of yesterday has made its 45th record high close. Today’s CPI number should shed light on the inflation story, if the number comes in higher than economist expectations the Fed ‘could’ be pushed into tapering sooner. This is exactly what the short sellers are looking for. I think we all know the S&P has gone too far too fast but my question is where else can investors put their money? Clearly, it’s not the bond market.
Our lean, low volume makes thin markets that are hard to sell. Jumps in inflation when the S&P is up so much could be a deal breaker. As I have always said, picking tops is the number one hardest trade you can make. Our lean is to keep an eye on the data and sell the early rallies and buy the pull backs using tight stops. If the bonds get hit the Nasdaq will fall.
As we all know, there’s no crystal ball when it comes to trading stocks, options, or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk-free for 30 days.
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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