On Wednesday, the ES tried to buck its pattern of selling off in the morning and bottoming later in the day. It did run some stops, all on the downside, but overall it held up better than it has over the last few weeks.
The ES dipped below the Globex low at 4430.75 and bottomed at 4427.50 in the opening minutes of the regular-hours trading session. We chopped around for the rest of the morning as the ES put in a series of higher lows.
At noon the ES took off and kept working its way higher until the close, ending at 4474.25 at 4:00 and 4476.50 at the 5:00 futures close. Overall, the ES climbed over 37 points or 0.84%.
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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.
How S&P 500 turned $10,000 into $78,000 — or $3 million
“It hasn’t paid to be bullish” on U.S. stocks at this time of year, according to Barry B. Bannister, Stifel Nicolaus & Co.’s head of institutional equity strategy. He cited a comparison between the value of $10,000 investments in the S&P 500 Index from 1950 in a report Monday. Anyone who owned the S&P 500 only in May through October would have ended up with about $78,000 based on total return, according to data compiled by Stifel. For November through April, the comparable total was about $3 million. To be sure, Bannister wrote that investing year-round would have turned $10,000 into $24.9 million.
The ES bounced exactly where we were watching yesterday — the 50-day moving average. It was highlighted on the chart very clearly, but so was the 4480 to 4485 area.
After Wednesday’s rally, we have an “inside day,” where yesterday’s range is completely within the prior day’s range (it’s on the chart below, too). That’s even as it gave us a nice rally.
On the upside, we need to see the ES clear Wednesday’s high of 4477.75, along with the 10-day and 21-day moving averages. On the downside, the 50-day remains the focus, as we come into the last two days of the week and ahead of Quad Witching expiration on Friday.
Our Lean: Remember the dips into Thursday, as they can sometimes set up for a bullish squeeze higher in the afternoon or on Friday. The ES is down 10 handles as of 8:00 a.m., so perhaps we’ll get an early low to trade against.
These sessions can be choppy and if you’re getting chopped up, remember, cash is a position too! Don’t force it.
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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