Market Review
It may not be likely that the market bottomed on quad-witch expiration, but it’s a possibility. As we have said all month long, September is a notoriously difficult month for trading. While August features way-too-low volumes, September comes with a heavy dose of volatility.
On the chart below, note how the ES traded during the last two quadruple expiration Fridays. They both timed up with tests of the 50-day moving average and they both came near the low in that correction.
Granted, we’ve rallied quite a ways since then and are still without a 5% correction. But it can’t be ruled out that perhaps we’ve seen enough selling. Down in 9 of the past 11 sessions, the ES will be due for a bounce sooner or later.
That said, we have been harping on the levels lately, pointing out that support has been near 4430 and resistance has been near 4480. On the downside, we also had the reliable 50-day moving average to lean on. Well, those support mark failed on Friday, with the ES bottoming at 4406.50. That said, it did close up at 4421.75.
Still, below these prior support levels now and the S&P futures aren’t looking all that great.
Economic Calendar
Closing Prices
In the TradeChat Room
Market On Close: $6B buy, all OPEX related
Check out all the Market Closing action in our daily post
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
.
SpyGate: Busy OPEX bot day, bearish open but close had some bullish glimmer to it.
Check out our Daily SpyGate Post
SpyGate is now available free to members of IMPRO and MIM trading room. Join the MiM.
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: ~09:32
09:30 – 10:00 16%
10:00 – 12:00 25%
12:00 – 15:30 34% (wrong)
15:30 – 16:00 23%
Low: ~13:50
10:00 – 12:00 >80% (wrong)
Today:
High:
10:00 – 12:00 78%
Low:
10:00 – 12:00 >80%
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
Nasdaq 100 without tech stocks just isn’t the same index
The Nasdaq 100 Index just wouldn’t be the same without its technology companies. About 40% of the U.S. equity benchmark’s components fit into the category as defined by FTSE Russell and Dow Jones, according to data compiled by Bloomberg. A gauge of all the others, the Nasdaq 100 Ex-Tech Sector Index, fell to record lows the past three days relative to an equally weighted version of the Nasdaq 100. “Technology stocks have been the primary driver of the Nasdaq 100,” Andrew Thrasher, founder of Thrasher Analytics, wrote in a Twitter post Thursday with a similar chart.
Our View
If the ES breaks Friday’s low and can’t reclaim it, bulls are going to have trouble drawing on a positive catalyst. Higher taxes, worries about the Delta variant, taper talk, etc. have all created reasons not to buy. Even though it hasn’t resulted in anything besides a “buyers strike,” the bulls won’t do themselves any favors if the ES loses 4400 and can’t reclaim this mark.
The S&P can fall for days or weeks, but it only takes one session to bring it back. Is that day coming? Maybe, but we don’t need to stick our necks out to find out.
Our Lean: Watch 4406 on the downside. If it holds, the ES can possibly trade back up to the 50-day moving average near 4435. If 4406 fails and the ES loses 4400, we could be looking at a dip down to the 21-week moving average, currently near 4340.
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
No responses yet