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!
Yesterday was the day you either made a bundle, sat on your hands, or as Niki says; got hit by a bus! As the POTUS $3.7T gains momentum, Wall Street may have already gotten out or gotten back in?
Today is triple witching day. Yea, it’s the day most traders have been waiting for. Yesterday POTUS talked about paying your fair share referring to Corporations and $400K individuals and that’s what traders were talking about.
Yesterday started as the previous day; pump and dump or as Wyckoff would say; “Opening bulge up.”
A five-minute buying wave that wet beaks the previous high and then bid hitters all the way down for 55 minutes. Then a 20-minute move up breaks the supply line forming preliminary support. With a 20-minute move down that sets the low of day defining selling climax.
An Automatic Rally for 110 minutes that recovers half of the decline and then a dip down to the top of preliminary support for 60 minutes set’s the stage for the move up.
A 10-minute move up and 10 minutes hesitation. A 5-minute move up and then 40 minutes sideways sets the support line as a 20-minute move up wet beaks the current high and is unable to probe the overbought line.
All the stars lined up in all the heavy hitter securities and bid hitters all the way to the close and then some.
Looking Forward to Friday, September 17, 2021
Since Sep. 10, most traders have held a bid bias. And got their head handed to them in the AM TRADE. Thursday tested that low and found a bid up to the 4475 handle.
GLOBEX: Smoked price back down to above halfway of Thursday range. Currently, price has found a bid and testing the 4470 to 4475 range.
Trade Plan: If the bulls can take out the 4480 with a catalyst on their side. Perhaps triple witching day you could see 4500 and beyond. I’m S2L so if the price follows the clock you should see the low of day around 10:15 through 10:45 marker. If it’s not so bullish then yea, it could fall through the PEON close. That would be a bearish day or just bulls needing to test the previous low on decreased volume.
Offing Events: The debt ceiling was kicked till September and perhaps beyond. Trillions in the Senate were 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 over the last two weekends. And now the media wants it forgotten.
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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.
High: ~15:00 (but only by around 0.50 on SPX from the 09:34 high) 60% 09:30 — > 10:00 (wrong but by inches) 17% 15:30 –> 16:00 (wrong)
Low: 75% 10:00 –> 12:00 (right ~11:00)
High: (Bax is really unsure, just going to give you the percentages for today)
What do the percentages mean? Baxter is a classification model trained to identify a coarse shape of price action. When the high or low is likely to occur. He can guess for four time frames correctly more than 66% of the time. The way classification programs work is a weighted value for each time frame is generated from our input data. When Baxter is sure he will produce a clear signal > 80%. If he cannot determine from the current input and past inputs, those weights get spread around. The guess is always the largest value no matter how close, but knowing that there is confusion might have some trading value.
Chart of the Day
S&P 500’s link to earnings looks different in longer view
Comparisons between the S&P 500 Index and corporate earnings hinge on the time period used for the analysis. This year, actual and projected earnings at S&P 500 companies have both climbed more than the U.S. equity benchmark, according to data compiled by Bloomberg. The index’s performance relative to profit forecasts was highlighted in a report last week by Keith Lerner, chief market strategist at Truist Wealth. Looking back to 2010, by contrast, shows the S&P 500 pulled away from earnings in the almost 18-month bull market now in progress.
One part of trading is identifying trends or patterns that we see in the market. These patterns don’t last forever, but once they’ve been identified, they should be traded until they fail. The current trend is pretty simple: Sell off after the open.
The ES opened at 4466.25, ripped higher by 10 points, and almost took out the Globex highs. Less than 10 minutes later, it had given up all of those gains and then some. At 10:20, the market bottomed at 4438.50 and rallied up to 4450.
From there, we faded again until the ES put in the session low at 10:55 at 4433.25. All week, the 4430s have been support as bears have been unable to drive the ES much lower than that. But the pattern has been the same all week: Sell the open and bottom a few hours later.
The ES did much better yesterday though, closing at 4467.50 at 4:00 and settling at 4476.50 at 5:00.
While the ES finished lower by 7.75 points on the day, it felt like a victory for the bulls as the ES was down almost 40 points at the low. Volume was decent at 1.47 million.
Quad-witch expiration isn’t going to make things easy today but if we take a “bigger picture” look at the technicals, the levels are showing up loud and clear.
Specifically, on the upside, the 10-day and 21-day moving averages are acting as resistance, along with the 4480 level. On the downside, support is coming into play around 4435 and the 50-day moving average.
What we are looking for is simple: A break of one of these levels and sustaining above or below them. Put another way, we’re looking for a break below support or a breakout over resistance that sticks.
That puts 4500+ in play on the upside and 4400 or lower in play on the downside. As traders, we don’t care which way it breaks, as long as we can trade it. Until then, we should continue to respect the current support/resistance zones.
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