Tuesday’s Session was Cycle Day 2 (CD2): Price declined to test the CD1 Low (4434.50) before closing back above. Range was 54.25 handles on 1.540M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Bulls will need to hold the CD1 Low (4434.50) to fulfill the Cycle Statistic. More importantly, bulls need to regain solid control with price retracement back to the 50-day ema zone. Previous tests of this zone have been successful, with subsequent strong rallies to new all-time highs. Can the bulls do it again? As such, estimated scenarios to consider for today’s trading.
SpyGate is now available free to members of IMPRO and MIM trading room. Join the MiM.
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 was not working yesterday.
High: 68% 09:30 — > 10:00 30% 15:30 –> 16:00
Low: 33% 12:00 –> 15:30 (weak prediction)
Chart of the Day
Growth spurt sends Nasdaq 100 near record versus the Dow
“The dominant theme in recent months has been growth, not quality” in U.S. stocks, according to Ari Wald, Oppenheimer & Co.’s chief technical analyst. He drew the conclusion in a weekend report that compared the Nasdaq 100 Index with the Dow Jones Industrial Average. The ratio between the two U.S. equity benchmarks closed a week ago at its highest level since March 2000, according to data compiled by Bloomberg. The milestone followed a 16% rally from this year’s low, set May 10. Faster-growing companies are poised to sustain their strength, Wald wrote, as the dollar rises and inflation slows.
If the ES didn’t have Monday’s 0.24% rally, we would have been down seven days in a row. Instead, it’s six of the last seven sessions that the ES has finished in the red.
It hasn’t been a good stretch for the bulls, but it’s been far from a disaster. Even at Tuesday’s low, we were only down 2.7% from the all-time high. Of course, many other stocks have been enduring a correction much deeper and for much longer.
Last week we pointed out the trend: Rally into the open, sell-off down to the low.
That pattern has continued this week, too. The CPI reading showed that inflation began to lose some momentum and it triggered a burst higher ahead of Tuesday’s open. Tech did okay at first, with the NQ pushing back above 15,500 for a few minutes.
But then everything flushed lower.
The ES opened near 4475, topped at 4477.25 a few minutes later, and flushed to a low of 4439.25 about an hour after the open. From there, each rally was sold into as the ES ended up bottoming at 4425.25 in the 2:30 window.
In terms of the ES’s overall tone, sellers controlled the day from the second the opening bell rang. The bulls squeezed it higher near the close, but not by much, with the ES ending the day about 12 points off the low.
September remains a difficult month to trade, as the choppy conditions continue. Lately, they have been selling all the rips but keeping the dips limited. Will that change?
So far the trend this year has been to drive the ES down to the 50-day moving average, where it tends to find support. It’s possible we “look below” this moving average and reclaim it. It’s also possible it fails and we revisit 4400 or lower. But know that this has been the trend and we’re near what has been supported.
Our Lean: It’s hard to get overly bearish after falling in six of seven sessions and trading down into support. That said, it’s Opex week with “quad-witching” on everyone’s mind. At the very least, be careful of an early rally. A gap-down pullback would be easier to buy, but we may get the early rally first.
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