In all this political uncertainty, who would have thought the next hot topic would be the unfairness of the common public getting a run on Wall Street’s finest? GameStop is a true example of supply and demand. In all the rhetoric, no one ever talks about going short the box. Had they been short the box, then they would have had the shares…
If you recall, over the last two weeks I’ve been talking about the insiders who were selling on the rallies. If you want to see a video I made (it’s not two hours, it’s just thirty minutes) I talk about how they took advantage of that micro-flash that was covered up with the liquidating accounts of the big boys.
It’s twenty-twenty-one and I’ve seen more change in the first four weeks of the infrastructure of this world than I’ve seen in all the previous decades. As a trader, we don’t get caught up in that. It’s odd, ALGOS have been taking the edge away from us since they left the fractions and now, the big boys are crying wolf…that’s not fair?
Yesterday should have been a no brainer. I went S2L IFFY which implies the day will just soar to the upside. Yes, the news was bad and the price was down. The virus was on the rise and the near $2T free money was nowhere in sight. And what was the volume the previous day? It was twice the normal volume. That’s telling you something!
That’s all you needed to know. Now, factor in Robin Hood locked out any other purchases; as WB might have said, it’s not shooting fish in a barrel but it’s near close. As we got the High of Day, which was the test of the creek what happened? Price turned tail and headed south.
Looking Forward Friday, January 29, 2021
The ease of movement is looking toward the downside. On a daily, we still keep flirting with that 37 big even. Will we take it out today? The news pending is Personal Income and Outlays at 8:30, Chicago PMI at 9:45, Consumer Sentiment & Pending Home Sales Index at 10:00. Could that move the needle?
To me, the tell was last Thursday, the 21st. With the narrow trading range on the lowest volume in the past five trading days. With that stated, once the free money gets approved or pushed through that may be the catalyst needed to give the next rally the impetus to get started.
This day has the potential for a trading range with the low in the morning and the high in the afternoon. Providing buying pressure can hold the lows. The question might be, does anyone want to go home short?
I give you the best of the old school market technicians, JP Morgan, Herriman, Kearn, and Livermore. The traders of the 1930s. How they may have seen the market. I use the lens of Richard D. Wyckoff Principles and Procedures and through the eyes of WB’s hidden internal clock. The clock that controls all turns intraday every day.
We had a good week this week. Our subscribers have been very lucky with the levels given: 61 points Monday, 14 points, Tuesday, 22 points Wednesday, and 12 points Thursday. Total for the week 109 points, which would be $5,450 on 1 lot and $16,350 on 3 lots. That’s due to the volatility that crept back into the market. I’ll be the first to say, it does NOT happen every week. When it does it’s a beautiful thing!
I would love for you to join us. If you have not taken the time, now would be a great time for you to subscribe. After you subscribe drop me an email at email@example.com we’ll set up a time to talk and help you discover how using WB’s clock can give you the gift of timing that you need in your trading life.
In the Tradechat Room
It was a sell into the close but the MIM really wasn’t too bad. That 3780 area is a magnet for prices. The Dquotes at 15:55 continue to add to the imbalance, that is longer-term disturbing in our top making project currently. The Robinhood-Reddit-Game-Stop lesson is that black swans don’t just turn the market into a runaway downside disaster because leverage and cash flow can be equally volatile to the upside. More volatility ahead. Best to keep your timeframe horizon narrow.
Israel continues to lead in vaccinations averaging vaccinating 2% of its population every day. Current vaccines require two jabs so for now 2% is about 1% of the population getting totally vaccinated. While the US leads the world in the total number or vaccines delivered into arms, on a percentage basis we are lagging behind our UK friends.
Both Johnson & Johnson and Novavax vaccines released preliminary studies on their trials in the last 24 hours. The top line number for Novvax is 90% and Johnson & Johnson is only 66%. Those numbers need to be explained as the South Africa efficacy for J&J was 57%. The picture is starting to become clear that once we take care of the model virus we still have some cleaning up to do with variants and that our covid vaccines will have to become broader spectrum much like our flu shots are now. The SARS-COV-2 is planning to hang around in the world and the post-pandemic world needs to be planned out.
Wear your masks! Stay at least 10 feet behind someone wearing a mask! (Particularly in a checkout line) Stay home! Take your Vitamin D!
Chart of the Day
(ESH20:CME) GLOBEX Session
(ESH20:CME) Day Session
Opening Print: 3767.25
Total Volume 2.0 M
S&P 500 Futures Recap – Trade Date January 28, 2021
S&P 500 Futures: Rebound Loses Steam Late Day
After trading in a 71.00-handle overnight range, the S&P 500 futures opened Thursday’s cash session at 3767.25, traded a daily low of 3762.50 and then rallied through the morning up to a 3822.50 high just before noon. Midday, the S&Ps chopped sideways and printed a daily high of 3823.50 just before 1:00 and then rolled over into strong selling for the remainder of the session pushing down to 3773.25 before settling at 3781.00.00, up 69.00 handles on impressive volume of just over two million contracts. In terms of price action, it was all about buying the open and then shorting the midday high.
S&P Futures Rallies 120 Points
After trading down to 3703.50 early yesterday morning the ES rallied and traded 3767.25 on yesterday’s 8:30 CT futures open, up 63.75 handles off the Globex low. Over the next 5 hours, the ES rallied another 56.25 handles up to 3823.50, up 120 handles off the Globex low. After the high, the ES sold off and settled the session at 3781.00 on the 3:15 futures close, 42.50 handles off the high. The ES opened at 3770.25 on Globex last night, traded up to 3777.25 and then sold off 55.75 handles down to 3721.50 and at 7:00 am this morning is trading 3755.25, up 33.75 handles off the Globex low on a total volume of 325,000 contracts traded. All I can say is I have never seen more algorithmic, high frequency and program trading in 24 hours in my trading career. I’m not sure what the markets are signaling but it sure is wearing people out.
Our view, the ES is holding at the 3700-3720 level. If the level breaks, 3670-75 could come into play. This morning Bitcoin is up 4,800 points, crude oil is up, gold is up, corn and beans are trading higher. In all honesty, I’m ‘confused’, the markets are moving from one extreme to the next. I remember doing the PitBull’s orders in the S&P and back then a 10 or 12 handle range was big, yesterday it was 10x that.
Our view, is to buy the down open or the first drop after the down open. If the markets hold I want to see how things are lining up for a late Friday rip. After all, it is the last trading day of January and I’m sure the shenanigans are not over.
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.