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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: ~15:55 10:00 – 12:00 84% (wrong)
Low: ~10:05 09:30 – 10:00 >90%
High: 09:30 – 10:00 38% 10:00 – 12:00 50%
Low: 10:00 – 12:00 >90%
Chart of the Day
Oil and Gas prices continue to climb into the fall.
Are the Bulls Getting Back in Control?
For the first time in what has seemed like forever, we were able to gap down at the open and watch the bulls bid the ES higher. The pattern over the last five weeks has been to sell the open, but with Wednesday’s big opening losses, that didn’t seem prudent.
Make no mistake either, sellers didn’t make it easy. While the ES opened at 4297 and quickly ran to 4317 — up 20 handles — sellers drove it down to a low of 4279, a dip of almost 40 handles. I said yesterday that these types of moves will continue.
From there, the ES rallied 40 handles to 4319.50 and pulled back to the 4295 area. Wednesday finally became a two-way trading range, with 4295 acting as support and 4315 acting as resistance. That all changed at 1:20 though, with a burst through resistance. That kickstarted a move that ran until the close, with the ES closing at 4353.50 at 4:00, up more than 56 points from the open and almost 80 handles from the low.
In terms of the ES’s overall tone, it was back-and-forth two-way action in the morning, followed by a strong push by the bulls. In terms of the ES’s overall trade, 2.14 million contracts traded, which is decent volume (and above the recent average).
The ES keeps wicking off the 4260 to 4270 area and closing above September low at 4293.75. That leaves us with a bit of a mixed picture. While the bulls are finding their footing and price is starting to firm up, the ES remains below both its short- and intermediate-term trends.
A move up to the 21-day moving average will give us an idea of just how strong the bulls are, but the real test is the 50-day. The 50-day had been strong support all year, but will it be resistance or can bulls reclaim it?
It will take a rally up toward the 4420 to 4430 area to find out.
On the downside, the area to watch is pretty clear. Below 4250 and things can get messy.
Our Lean: The ES isn’t out of the woods yet — not by a long shot. But Wednesday’s action did a lot to change the narrative. Now we need some follow-through and continuation. Don’t forget, we have the NFP report on Friday and based on the Fed’s recent commentary, the results are actually pretty important in terms of how it will affect their tapering plans.
If we open lower on Thursday, I’ll be looking to buy the dip. If we gap higher, It will leave me a bit more defensive, but if the ES can clear 4400, a test of the 50-day may be on tap.
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.
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