Last week was rollover of the S&P 500 e-mini (ES) with March 2021 becoming the front month. This week’s chart reflects the ES March 2021 (ESH21) contract. The premium difference on rollover was 8.25 points, thus in general, this week’s support and resistance areas are 8.25 points lower than last week.
From a technical perspective, not much has changed from last week. The ESH21 continues to move to new all-time highs although the ESH21 sold off in the latter part of the week to continue its consolidation in the 3620 to 3708 area. The longer the ESH21 consolidates in this area, the bigger the move from it will be. On Monday, the ESH21 opened up strong on hopes of a coronavirus relief package before Congress breaks for the holidays. The bulls, however, could not reach last Wednesday’s 3707.50 all-time high before the bears sold off during Monday’s US session. The high failure could be significant. If the ESH21 can clear the 3618-3620s structural support, it could be in for a tumble.
Volatility climbed last week as the bears worked the ESH21 lower. The 5-day average daily range rose from 36 points last Monday to 47 points this week.
US markets remain in limbo over a coronavirus relief package. Trump promised the fake news hype over the coronavirus would disappear after the election. What has disappeared is Trump as he’s cleared his calendar and shifted his focus on discrediting the presidential election. The coronavirus has not disappeared. US coronavirus cases have skyrocketed to over 16.5M and deaths over 300M as the Pfizer/BioNTech vaccine starts arriving at hospitals.
Biden won the electoral college vote late Monday afternoon. Almost all of President Trump’s legal team attempts to discredit the voting processes of swing states with unproven accusations and unreliable affidavits have been rejected by state courts, federal courts, the Supreme Court, and Republican led state governments. Trump’s loyal defender Attorney General Bill Barr, who said weeks ago that the DOJ found no evidence of widespread election fraud, resigned on Monday. Markets have endured the post-election circus and lack of a 5th coronavirus relief package. The hope of another package keeps stocks afloat for now.
Resistance Areas (above):
Support Areas (below):
Below is a snap of the ESH21 daily chart with the above support and resistance numbers marked for reference. Thanks again for reading. For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com
In the Tradechat Room
A 2B MOC to sell took our 15:50 candle, down 8 points and had started a sell from the 15:30 candle. A good closing MiM.
Questions? Please email me: Marlin@mrtopstep.com
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There is good news in the numbers if it can break through the bad news. Since yesterday two states have moved out of the rising category and three states join the falling category. That doesn’t help those in AZ, CA, NH and ME though. Diligence, behavior modification, and nature are needed for that.
While the early vaccines are great news, right now it is a drop in the bucket and the next 3 months are going to need better education, testing, and infrastructure.
Wear your masks!
Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line)
Take your Vitamin D!
GMTT – Feb GOLD
Gold continues to trade within a $100 range.
Off its low at 1764 we reached this morning our upside target of 1847.
Now Gold is at a turning point, either it is going to break-out or will fall back again.
The next projected upside target is 1883, and we suggest to keep a tight sell stop at 1835.
Traders that prefer to trade GLD – next upside target is 177.40 and the suggested sell stop 169.80.
In our three weekly GMTT research report we update this sector and many other sectors with our Thoughts and Trading Entry and Exit Signals.
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|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3685.00||Opening Print: 3678.75|
|Low: 3667/25||High 3691.50|
|Volume: 170,000||Low: 3637.50|
|ES Settlement 3643.25|
|Total Volume 2.26 M|
S&P 500 Futures: Sellers Extend Last Week’s Losses
After trading in a 17.75 handle overnight range, the S&P 500 futures opened Monday’s cash session at 3678.75, down 24.75 handles, traded to a daily high of 3691.50 just after 9:30 CT before selling off for the rest of the session, first making a morning low of 3658.75, then following a six handle rally to the afternoon high of 3664.75 in the noon hour. The equity sell-off continued toward the daily low of 3637.50 late in the session before settling at 3643.25 down 10.25 handles or -0.28%.
In terms of the overall price action, it was all about selling the 9:30 high and holding into the close. In terms of the day’s overall trade, volume was the highest in over a month at 2.26 million.
CME, Google, Interactive Brokers Disruptions
When foreign players hack US government agencies and Google goes down, the CME and Interactive Brokers platforms go down one has to wonder if something more sinister is going on. That said, the S&P made ‘another’ new high with all 11 sectors closing higher but it was the tech-heavy Nasdaq that led the way to close up 0.50% and the Dow closed down 0.60% on the day. It didn’t take long for the ES to reverse yesterday. I explained to the MrTopStep forum that it felt like the markets were too long and I sold into it. The future went against me a few handles then just started to dump. At or near the highs I also told the forum and Twitter that the ‘the next 20 handles is down’ and 30+ minutes later the ES was 26 off its high. I have to be honest, I am a bit nervous about how much the markets have rallied. The Nasdaq is up 39% YTD and the PitBull keeps reminding me of 1987 and 1999-2000. Exactly like back then the markets were making new highs every day before they crashed. I am bullish but there are so many moving parts to the stock market I do not think anyone can keep up with all of it. This week is another week of big events, the fed’s two-day meeting that starts today, the December quad Witch and the big mutual and ETF funds starting to adjust their positions for TSLA’s entrance into the S&P on Friday. I know they talk about the other large IPO’s but TSLA’s a different animal and it’s joining the S&P during unprecedented times. Yesterday’s total ES volume was 2.6 million, that’s more than a million contracts higher than any day last week. While the fed meeting may slow things a bit I think many of the big investment firms / ETF / mutual funds have already started adjusting their positions. They know as TSLA goes into the S&P many of the 500 stocks will see reduced weightings. So where do we go from here? I still think we are going to 3720 but after such a big rally I can’t rule out another dip.
Our view, my gut feeling says the risk is to the downside. Yesterday the funds rotated out of the Dow into the Nasdaq with the ES underperforming slightly. I think based on the Nasdaq’s recent price action it was well overdue for a rip. I’m not saying the markets can’t rally, I’m saying the higher it goes the risk of some type of sell-off /pullback increase. Our lean, trade it like it says; sell the rip and buy the dips.
TSLE is the December quad witch disrupter. Historically the week of the December quad witch is bullish and while the S&P has already rallied sharply in December, from today the 15th through the 31st the S&P has risen 75% of the time over the last 40 years.
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.