Market Review
Up, up, and away! After last Monday’s break of a multi-week consolidation, the ESU20 flew higher and higher to record closes the next 4 days. This Monday is the first down close since Aug 19 and institutions led the way. Retail traders piled into Apple (APPL) and Tesla (TSLA) after their stock splits which brought retail trading platforms including TDAmeritrade and Robinhood down to crippling speeds. Monday turned into a day of retail buying into institutions adjusting for the new company mix of the Dow Industrials.
From a technical standpoint, there is not much difference between this week and last week. The ESU20 is up nearly 100 points since last Monday with no significant bumps in the road on the way up. This leaves the potential for plenty of backfill trading between 3390 to 3490 if the ESU20 drops back into the low volume area. Every daily low from last week becomes a potential support area back into the consolidation area below 3400. The only potential structural resistance is Monday’s 3524.50 Globex high which is weak resistance until proven otherwise.
Volatility moved back down as the ESU20 moved up. Nothing has fundamentally changed for the US economy over the last week as the Fed reiterates their monetary policy support for keeping an inflation average around 2%. There is still a promised coronavirus relief package to be addressed when Congress returns to DC on September 7. Passage of another package could send the ESU20 skyward again.
Below is a snap of the ESU20 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
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MiM
Our end-of-month MOC was a decent surprise to the downside at 1.5B. That caught a lot of traders off guard as the preceding 15:45 candle was a nice upside move. The surprise brought us from down about 7 points and the next candle at 15:55 dropped about 12 points more. A red close for the day. Light trading expected for the rest of this week as the US goes into its summer close topped with a 3-day weekend.
Questions? Please email me: Marlin@mrtopstep.com
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Covid-19
We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quickly as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).
The pace has slowed but progress is being made as schools reopen.
We continue to focus on our top 3, Florida (20M pop), Texas (30M), and California (40M) looking at daily deaths, but more importantly, changes in the count.
Today might be a good day for Florida to break that death rate stall with an o/u number of 183. Any less, say 150, will be a good start to lower numbers. California still has not moved lower and Texas is also doing a bit of a stall.
Over / Under
These are the over/under numbers for today. In order to push the 7-day average lower, today’s reported numbers need to be lower than the target number. A new case or death number that is higher will increase the 7-day average.
Yesterday’s over/under numbers and actual are also in the table.
| Yesterday | Yesterday | Today | Today | |
| State | Cases | Deaths | Cases | Deaths |
| Florida | 2,258 / 1,885 | 72 / 68 | 2,673 | 183 |
| Texas | 2,847 / 2,615 | 25 / 26 | 6,346 | 181 |
| California | 4,946 / 4,176 | 18 / 28 | 4,480 | 105 |
| New York | 408 / 656 | 7 / 1 | 629 | 2 |
Use today’s numbers to watch the releases to determine the trend.
South Dakota is in exponential growth and tops our worst states today. They need some quick contact tracing and isolation to break the chain. This virus is very volatile and can flare up quickly!
To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.
Wear your masks!
Stay Home!
Chart of the Day
GLOBEX
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3909.75 | Opening Print: 3493.75 |
| Low: 3482.50 | High 3506.75 |
| Volume: 280,000 | Low: 3480.75 |
| ES Settlement 3503.75 | |
| Total Volume 1.2 Milliion |
S&P 500 RECAP – Trade Date 08/31/ 2020
#ES Money Maker Chart
#ES 3524.75 Largest Monthly Gain Since April
Our View
The bears have been under siege over the last two months but August was a banner month! As of yesterday’s close the DOW, S&P, and Nasdaq had their best month since April. After an over 32% drop in February that put an end to the longest bull market on record, all three indexes have climbed for five consecutive months. The S&P 500 has surged 35% during that period, its largest 5-month gain since 1938 and closed up 7% for the months and its best August since 1986. The Dow Jones and the Nasdaq Composite closed out the month up 7.6% and 9.6% for their best month since April. Additionally, the Nasdaq made another new record high, up 31% YTD. It has been an amazing run that has exceeded ‘everyone’s’ expectations. I talk to a lot of traders and not one said the ES would be trading 3520 after it started to tumble in February and March. I also know there are a lot of traders that want to get short and while I agree the ES is overdue for a pullback most of what we have seen over the last several weeks is 30 or 40 handle pullbacks. Early last night the ES traded down to the 3484 area on Globex and then rallied 10 handles up to 3494. Personally, I agree the ES / NQ are overdue for a sell-off / pullback. Will the pullback be 40 handles or 140 handles? To tell the truth, I don’t know. What I do know is basic trading rules apply; the trend and the fed are your friends and if the markets are going up or down I want to go for the ride. It’s funny, I knew yesterday was going to be a hard sale after the ES sold off on Globex before the 8;30 open. Yes, it had another leg down but if we are going to talk S&P you better throw in the NQ because it’s the market leader. Yesterday’s rotations were also very noticeable, buy Nasdaq / sell Dow, Russell, and S&P. And when you throw in the VIX trading above 26 it all made for a very interesting trading day.
Our view is to sell a gap up open or the early rallies and buy the early pullback and look for the midmorning low for a pop up. I’m sure there will be dips. I just think they will be bought.
Market Vitals Technical Analysis
Did you know that your premium membership gives you access to our Market Vitals? Click on the image below and get today’s key levels.
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.
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