Market Review
Last week I wrote, “If the bulls can clear the 50-day MA, then 3440 becomes the next significant area of technical resistance”. The bulls could never quite clear the ESZ20 50-day MA The ESZ20 stayed muddled, rotating all week around the 50-day MA, favoring the bulls. Monday’s bullish move is a potential clearing move and the 3440 area remains the next significant area of resistance. With President Trump returning from the hospital to the White House, apparently recovering well from COVID-19 and a renewed focus for coronavirus relief aid, the bulls may get the fuel they need. If the 3440s are cleared, then the 3470s should be tested. After the 3470s, the 3576.50 all-time high is the target although it would be a stretch for the bulls to reach this week.
On the downside, the 3290-3300 area has shored up as the initial significant area of technical support. Below there, the 3200s is a significant bearish target.
Volatility remains elevated with the average ESZ20 average daily range slipping from 75 points last week to 64 points this week. National politics took a backseat the last few days as concerns for President Trump’s health took center stage and rival Joe Biden turned off his attack ads while Trump recovers. Expect the rhetoric to start ramping back up as election day is 4 weeks away. Brokerages are expecting volatility through the elections and have recently been raising futures margin rates.
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
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A very, very small MOC at 15:50 after an almost 25 point run in ES into the close. A strong close on a strong day where the MOC did not matter.
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Covid Corner:
It’s Tuesday, so it is election day in COVID corner. We are looking at three of the states that the Trump team must carry in November in order to secure a victory. SInce COVID has become the number one issue we want to take a look at these swings states. Ohio seems to be in a range of around 1,200 new cases with neither a breakdown nor breakout. Same for North Carolina and Florida which has now fully reopened has not seen a bump yet.
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.
I continue to read headlines that are cherry picking outbreaks like the one in Wisconsis, but over all the US is not worsening that I can see as we head not only into election season but flu season. Our new cases are in the 45k range. That blip was around Labor Day holiday which was more attributed to vacations than progress. Our back-to-school special amongst college age kid are showing up now and that trend is worrisome but I would imagine once the thrill is gone we would see a decline again.
On the daily new deahts side there is just the slightest sign of an uptick but we have settled into the 750ish a day range now on the 7 day average. Overall I can not see any upward trend on a macro basis.
Wear your masks!
Stay home!
Take your Vitamin D!
Chart of the Day
GLOBEX
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3367.75 | Opening Print: 3360.50 |
| Low: 3346.50 | High 3400.00 |
| Volume: 156,000 | Low: 3360.50 |
| ES Settlement 3339.50 | |
| Total Volume 1.0 M |
S&P 500 RECAP – Trade Date 10/05/ 2020
S&P 500 Futures: First Mutual Fund Monday of October Targets 3400
After a 21.25 handle overnight range, the S&P 500 futures opened Monday’s regular session at 3360.50, up 21.00 handles and this open would be the low print of the day as the index would rally up to a 3388.50 for the morning high just before 10:30 CT. Then the S&Ps would trade sideways to lower through the rest of the morning and midday making an afternoon low of 3375.50 just after 1:00 when buy momentum would push the ES up to 3400.00 late in the final hour before settling the day at 3393.00, up 53.50 handles or +1.55%.
In terms of volume, the ESZ barely printed over a million contracts traded, in terms of price action, it was all about buying the open, and if you missed it, then the early afternoon 13.00 handle pullback was a gift to reload.
OUR VIEW:
#ES Volume Drops 50%
Volume in the S&P 500 futures (ESZ20:CME) has been tracking just over 2 million contracts a day over the last several days but it dropped 50% yesterday down to just 1 million contracts. Despite the ES closing up 1.8%, the VIX closed at +27.96 +0.33 (1.19%). Last week the markets got rattled by the news that President Trump had tested positive for COVID19. The uncertainty did not play out well on the S&P and NASDAQ last Friday but they rose Sunday night and rallied all day Monday. One of my rules is to be honest when I make bad calls or trade poorly. I had my best trading day in over 3 months last Monday and by Friday had lost it all and got off to a bad start yesterday when I sold the open and continued to sell it as the futures rallied. I broke several of my trading rules and I paid the price. My lean was to buy a sharply lower open and sell the rallies or sell the gap up and buy the pullbacks but there was no pullback. The first rule I didn’t pay attention to was the ESs low Globex volume that was a mere 156,000 contracts. Maybe someone else would make an excuse but plain and simple; I lost my feel over the last 3 sessions. I knew people had over hedged and when the futures started going up after the open you could see the premiums between the S&P 500 cash and the ES futures widened out. This is a particularly bullish setup. With so many buy stops above and cash buyers forcing the shorts out it became a giant buy program.
Our view, I am looking to buy any 20 to 30 handle pull back. I can’t rule out that ‘you’ can’t sell the rally but I am going to stick with buying the dip. If I am right I think there is a good chance the ES trades above 3430 or higher. I also want to keep an eye on the VIX.
Market Vitals Technical Analysis
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As always, please use protective buy and sell stops when trading futures and options.
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