Market Review
The bulls grabbed control of the day right from the open. The ES opened Monday’s regular session at 4454.25. Two hours later, it was trading 4480.75, up 43 points or up 0.95%.
Around the same time, the NQ just made a new high at 15,285, up 195 points or +1.25% on the day. Breadth was robust in the Nasdaq, as it registered an 86.7% “up” day. That’s about in line with its opening hour breadth reading, as the index stayed strong all day. The NYSE was strong too, ending with a 78.9% “up” day.
After a small pullback, the ES hit the price target I mentioned in yesterday’s ‘Our View’ section, tagging 4480 a little bit quicker than I thought. At 1:12 the ES traded 4485.75 and then did another small pullback down to 4477.50. The ES traded 4480.50 as the 3:50 cash imbalance showed $842 million to sell and then traded down to the 4475 level.
The ES traded 4476.50 on the 4:00 cash close and settled at 4481.25 on the 5:00 futures close, up 43.75 points or +1% on the day. The NQ made its high at 15,337.50 and settled at 15,304.50, up 217.75 points or 1.44% on the day.
In the end, it was a big buying spree with all the indices on board. In terms of the ES’s overall tone, it was strikingly firm with only minor pullbacks. In terms of the ES’s overall trade, volume was low as 189,000 traded on Globex and 770,000 traded on the day session for a total of roughly 959,000 contracts.
Economic Calendar
Closing Prices
In the TradeChat Room
Market On Close: -842M to sell. Took some shine off the day’s price action.
Check out all the Market Closing action in our daily post
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SpyGate: More selling then buying the day.
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Baxter
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.
Baxter predicts today with some confidence that the low of the day will come in between 10:00 and 12:00. He is 98% confident in that call. For the high of the day, he is not so confident. The best guess with 80% confidence is the high will be set during the last 30 minutes of trading or a 20% chance of setting up between 10:00 and 12:00.
Chart of the Day
Surging sales bring ‘new worry’ about U.S. stocks for GMO
“When the ducks are quacking, feed ‘em.” This variation on a Wall Street proverb headlined a note Thursday from GMO LLC, a Boston-based money manager, that cited stock-sale data compiled by the Federal Reserve. U.S. companies outside of finance sold a net $226.2 billion of shares for the 12 months ended in March, the most recent period available. The total was 56% higher than a record set in April 2000, just after a bull market peaked. The surge is “a new worry” on top of historically high stock valuations, GMO’s asset-allocation team wrote in the note.
Our View
Yesterday was a “take no prisoners” day. If you sold it, you lost until late in the day when the MiM started showing for sale. I know selling the open didn’t work and that’s because there were stop-run buy programs going on. Anytime we are going into a “trend day,” it’s hard to fight it. It’s also hard to know when those days are coming and the strong opening breadth was one clue.
The other part is Mondays have been good recently. I’m not going to do any drawn-out view/lean today. We all know the ES should pull back today, but how far will it go? 8 points to 18 points. Let’s face it, August, September, and October are known for their down moves, but that goes against the trillions in stimulus and zero borrowing cost. I had 4480 as my target yesterday and now I am looking at 4520. How we get there is up to you.
The ES gave us a nice push from the 50-day moving average, as it reclaimed both the 10-day and the 21-day moving averages on Friday. With Monday’s rally, we have new highs. Keep an eye on that 4475 area. That was resistance last week and around where we closed on Monday.
We’re getting a push higher in morning Globex trading, but if the ES can’t hold Monday’s high of 4485.75, that 4475 area remains in play. Below that and we could see some weakness down toward the 10-day moving average.
Above 4500 opens the door to 4520, followed by a potential push to the 161.8% extension near 4556.
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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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