Market Review
After trading up to 4472 on Globex, the ES sold off down to 4427 and opened Monday’s regular session at 4433.50. Shortly after the open, the ES traded up to the 4439 area and then sold off down to the low of the day at 4425. After the low the ES ‘back and filled’ at the 4430 to 4435 area and then rallied up to a 4446.50 ‘double top’ around 10:40 a.m.
From there, it sold back off to the 4429.50 area at 11:51. The ES pushed back up to the 4434 area, pulled back a few points, and traded back up to 4441.75 just after 2:00. After dipping to 4438.50, the ES rallied up to 4443.25.
The next move was back down to the 4438 level and then up to 4441 as the MIM showed $198 million to sell. The ES traded 4435 as the 3:50 cash imbalance showed $ 2.1 billion to sell and traded down to the 4429.50 area right after. It traded 4433.50 on the 4:00 cash close and settled at 4429.25 on the 5:00 futures close, down 12.75 points or 0.29% on the day.
In the end, higher yields hit the Nasdaq and took the ES for the ride in a very choppy trading session. In terms of the ES’s overall tone, it was negative. In terms of the day’s overall trade, volume was low at 1.25 million contracts traded.
Economic Calendar
Closing Prices
In the TradeChat Room
Market On Close: A decent sell with real sector selling. Symbols 2:1 to the sell-side
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SpyGate: Even number of buys/sells but sells much more agressive. Close was bearish.
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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.
Last Trading Day:
High: ~10:30
10:00 – 12:00 28% (right)
12:00 – 15:30 37% (wrong)
Low: ~09:40
12:00 – 15:30 >90% (wrong)
Baxter’s 2nd weak guess was correct and that afternoon session low did not get below the opening low so he missed that one.
Today:
High:
12:00 – 15:30 22%
15:30 – 16:00 65%
Low:
09:30 – 10:00 73%
12:00 – 15:30 23%
Chart of the Day
Alibaba’s lost treasure sends market value below Walmart
Alibaba Group Holding Ltd. took its first name from the tale of a woodcutter who found treasure hidden by 40 thieves. Now the Chinese online retailer finds its market value dwindling, just as the thieves’ stash did in the story. Alibaba fell below the value of Walmart Inc., the world’s biggest retailer by sales, on Friday for the first time since August 2016. The reversal followed a 54% plunge in Alibaba’s value from a record $858.1 billion last October, before a Chinese government crackdown on technology-driven companies, according to data compiled by Bloomberg.
Our View
Some traders are saying the September end of the quarter rebalance is “no big deal.” Well, that may be true, but when you throw in the constant 40 to 50 point ranges we have been seeing nearly every day, it very well could be a big deal. While I still think higher prices are coming, I also think the overall tone of the ES is a bit sketchy. It feels like it’s waiting on bad news.
Our lean: I know this sounds funny, but if you are day trading I think you can play both sides, selling the rips and buying the dips. However, if you are set on going long you better be careful. The yield on the 10-year got up to 1.517%, while crude oil is trading above $76 and Brent is trading near $80. At some point, higher rates and higher costs could create some issues. We all remember how growth stocks and tech responded to the jump in the 10-year earlier this year, don’t we?
When it comes to discretionary stocks, keep an eye on Amazon, Tesla, Home Depot, and McDonald’s.
As we all know, there’s no crystal ball when it comes to trading stocks, options, or futures. But the Market Imbalance Meter may be as close as it comes. Knowing how the “Big Money” is placing its bets can give our trading room a big wave to ride — or a warning sign to stay out of the water. Come check it out now, risk-free for 30 days.
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
