Disclaimer: For educational use only. I’m not dispensing financial advice. We are having an intellectual conversation (you and I) on the topic of trading the Emin futures using the Lens of Wyckoff Principles and the Eyes of WB’s clock. The clock that controls all turns intraday, every day!
What the market giveth the GLOBEX takes it away. During the CASH RTE bulls had a clear path to the big even 4450 handle. By 2:30 pm the bears caught them overextended and exhausted. Seeing a soap drop, the bears picked up the ball, and now price has traded away at least half if not more by the opening bell today. Regardless, most traders are seeing 4500 where they were looking to put on big puts just a few days ago.
I’m seeing two angles of decent. Perhaps we’ll see a sold-out/oversold technical position and the bulls will be back in business in a few days. It’s the weekend, and I can’t think of a single good thing that would drive this market back up. Perhaps the infrastructure vote might be the catalyst or perhaps not?
Looking Forward to Friday, September 24, 2021
There’s been a lot of talk about VWAP and 5 and 10-day moving averages. I trade naked so I don’t really see those. I follow 34 securities in the SP500 to time the buying and selling waves.
The three levels I’m watching are the YELL 4386, 4394, and the 4404 open from yesterday. Currently, we are getting a bid at 4420, that’s the halfway retracement from the last rally. A #1 Spring and a pop back up. Price favors the bulls if they can hold it. If not, perhaps the three levels mentioned above might hold. Update: Looks like a news bomb regarding the Evergrande debacle hit the tape and price may just trade all gains away from yesterday. Perhaps not…
It’s a Friday, we got scare the bulls and book square with who wants to go home short over the weekend? And the first day of the cycle. The cycle flips to the bearish side so it could get interesting over the weekend.
Offing Events: The debt ceiling was kicked till September and December or later. Trillions are waiting to be voted on. A variant of the virus is on the rise. Delta, Lamba is Gamma next? The country is coming undone at the seams. September/October may just be the catalyst for the truth to be revealed. Cyberwar perhaps kinetic looming? Yea that kinda started In Texas. And now the media wants it forgotten. However, if you’re in the club and the spirit moves ya, Tony, Toni Tone needs to be playing…
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Baxter is our new AI trading helper. This data is early, new, and not very well tested but we want to share some of our findings. We are concentrating on the SP500 which should benefit ES futures and SPY traders.
Last Trading Day:
High: ~13:45 09:30 – 10:00 55% (wrong)
Low: ~09:30 10:00 – 12:00 63% 12:00 15:30 25%
Baxter missed both time slots yesterday with a cannon shot day as the low was on the open and the market never looked back.
High: 10:00 – 12:00 33% 12:00 – 15:30 33%
Low: 09:30 – 12:00 >90%
Baxter is having a hard time this week and can’t really make a call on the high for today.
Chart of the Day
U.S. commodity stocks lie fallow as product prices climb
Commodity producers have failed to regain influence in the S&P 500 Index even as prices for the goods they provide move higher. Energy and materials stocks together accounted for about 5% of the U.S. equity benchmark as of Wednesday, according to data compiled by Bloomberg. They had about the same weight as they did in March 2020, when the Bloomberg Commodity Index retreated to its lowest level since 1974. The commodity-price gauge surged 63% from its low through Wednesday.
The S&P futures that closed Wednesday’s regular session at 4384.25, opened yesterday’s regular session at 4405.75, up over 21 points. It quickly down-ticked to the low of the day at 4401.25 a few minutes after the open and then a big index buy program hit, running stops and squeezing out the short sellers all the way up to 4445.25, up 44 points off the early low and up almost 60 points from the 4383.50 overnight Globex low. There were some small pullbacks along the way, but it seems like the futures were on a mission.
After the high, the ES ‘back and filled’ in a 4- to 6-point range and then in came another big buy program that pushed the ES all the way up to 4455 going into 2:00. It sold off 9.75 points down to 4445.25 just before 3:00. The ES continued to down-tick as the early MIM showed over $650 million to sell. The ES traded 4442.25 as the 3:50 cash imbalance showed $1.79 billion for sale, traded 4437 on the 4:00 cash close, and ended the day at 4439 on the 5:00 futures close, up 54 points or 1.23% on the day.
In the end, the bulls continued to control the tape. It was one set of buy programs after another. In terms of the ES’s overall tone, the S&P becomes ‘super charged’ when you have natural cash stock buyers enter with so many short sellers, be it a hedge fund or an individual that sells option premium. When the cash trades at a premium to the S&P futures, it causes index buy programs that lift the offers in the ES and in turn, run the buy stops. In terms of the day’s overall trade, 1.41 million ES futures traded, which again would be considered low for the size of the move.
I can’t speak for you, but it seems like the trading day never ends. I really think it worked better with the ES closing 15 minutes after the 4:00 cash close. The close at 5:00 means the S&P futures are open 23 hours a day. I try my best not to look at prices at night, but I do when I have a position on. After the ES traded up to 4424.75 on Globex, I got out at 4412, then watched the ES rally up to 4455. Sometimes when you get a good runner it’s best to just honor your stop and let it run. It’s the only way to take part in the larger move. Today’s economic calendar includes new home sales at 10:00 am ET, but that’s overshadowed by a couple of “Fed Heads” talking about 10 as well. Among them includes Jerome Powell.
While I think higher prices are ultimately on the way, we still have the September end-of-quarter rebalance, while October is known for its crashes and deep pullbacks. At yesterday’s high, the ES had rallied 161 points off its 4293.25 low, while supply chain problems continue to build and the debt ceiling is still festering.
The markets remain sensitive to all the headline news we have seen, be it from the U.S. or overseas. With a lot of big pops and big drops and wide trading rangles, sell the rips and buy the dips!
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