Market Review
Disclaimer: For educational use only. I’m not dispensing financial advice. We are having an intellectual conversation (you and I) on the topic of trading the Emin futures using the Lens of Wyckoff Principles and the Eyes of WB’s clock. The clock that controls all turns intraday, every day!
The first job’s number did not move the needle, perhaps today’s will? The first level clipped four points out of the market, the second delivered two. Six points total profit on a Wild Card day. Trading at the high of the previous day on the lowest volume I’ve seen in a while. It amazed me, we never voted on electric cars or 5G network? Yes, they voted in the Trillion dollar infrastructure in the Senate. And kicked the can on the debt ceiling till September.
I’m told they are putting 300 cameras in a 6-mile stretch in Tennessee. That’s 50 cameras per mile. By the way, the testing for the mileage tax that will affect everyone who drives a petrol car is in the infrastructure plan? And the cameras run on 5G!
Market Timing: Spill up late and strong. AM LOW center time. Now that’s a perfect day. Wild Card. You need a surgeon scalpel to trade it WB would say. Rope Follows expansion. Yes, that was yesterday! Mid AM HIGH, where you’d expect it. Right at the level I gave (look at the chart below). Lunch low 1:00 pm. It doesn’t get better than this. Mid PM HIGH a little early at 2:00 pm. And the LAST HOUR LOW (not so low) 3:30 center time. If you knew the clock you used the clock to make a profit yesterday.
Weekly: The bulls are trying to bring it this week, but price keeps getting checked at the highs. Volume is the lowest of the lows of the lows. One day left.
Daily: Price is trading in the range of the previous day of the previous day. Which was also dismal and also on low volume. Traders are waiting for jobs number Friday.
Technical Position: Most S&P 500 securities that traded within the range of their previous day range were drifting down. Those that gapped up either lost their bid by 10:00 am or traded strong gap up the rest of the day. No overall trend was driving the S&P 500 securities. Volume came in on the first minute but dropped off on a 40 minute buying wave. A 30 minute selling wave held the halfway of the rally. This indicated higher highs. A 70 minute buying wave is unable to extend price expansion.
This is followed by a 90 selling wave the returns price. The bears may be sold out as a 70 minute buying wave wet beaks a new high by a tick. An 80 minute selling wave finds a bid at the 5/8 retracement. This encourages the bulls to bring it to the closing print with a 40 minute rally on increasing volume that prints a new high of day.
The day ends favoring the bulls as the bears were unable to gain a following. Provided Globex is able to hold this following with the JOBS number in a positive light and the S4H day. It could be a good day for the bulls.
Looking Forward Friday, August 5, 2021
GLOBEX: As I write, price has held the run up from the last fifteen minutes till Settle. The current high is 4422 handle. Price is in a four-handle range. Waiting for 8:30 jobs number. The next level I had was 4420 (see chart above).
Trade Plan: By my eye, I’m not seeing pressing supply on the market. Yes, there are 2K blocks on the sell-side but the algos are able to bring price back up to do it again. The jobs number is the catalyst to move the needle today.
As you are reading this the numbers would have been released. It’s an S4H day. The market is going up for no good reason. Don’t fight the trend. This day has a high probability for the high of day to print in the last hour or last print. That is if buying pressure can bring it and the Jobs number is traded in a positive light.
Offing Events: The debt ceiling was kicked till September. Trillions in the Senate were voted on. A variant of the virus is on the rise. Delta, Lamba is Gamma next? The country is coming undone at the seams. September / October may just be the catalyst for the truth to be revealed. Cyberwar perhaps kinetic looming?
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Baxter:
Baxter is back!
Baxter again is too aggressive on range here. We are just finishing a 2nd model that is fed by the first mode and looks post-open to update the predictions. Today another wide range.
Chart of the Day
For S&P 500 stocks, triple-dGap among rate-sensitive U.S. stocks brings reversal call
Two of the most rate-sensitive U.S. industry groups are due for a reversal in stock performance, according to Jonathan Krinsky, chief market technician at Bay Crest Partners. He recommended buying the Utilities Select Sector SPDR exchange-traded fund and betting against the iShares U.S. Real Estate ETF in a report Tuesday. The call was made after the ratio between the S&P 500 utility and real-estate indexes reached a 14-year low last month, according to data compiled by Bloomberg. Utilities “are coiled and ready for a breakout,” Krinsky wrote, while real-estate stocks “are looking tired.”
Our View
S&P 500 Futures Hit Lowest Volume of the Year — Jobs Day
I have written the Opening Print since 1995, before I started doing Sheikh Mohammed’s futures and options business. I remember being in Dubai and writing the OP after the ES closed at 1:15 a.m., then going out until 5:00 a.m. and getting up at 11:00 a.m. and doing it all over again. One time we stayed for almost 3 weeks.
I love writing about the S&P, but I also have a question I would like to present: Is the ES recap necessary? Personally I don’t know. My friend Tony says “scrap the recap, I only read the view.”
So what happened in the S&P futures yesterday? It was extremely quiet all day. The ES willy-wagged around, holding just above the VWAP all day until the MIM flipped from $200 million to buy to $522 million to buy on the 3:50 cash imbalance and climbed up to $670 million to buy at 3:55 ET. I could do all the little dips and rips but from 9:41 to 3:34 the ES traded in a 9-handle range with most of the price action stuck between 4407.00 to 4415.00. After the MIM came out, the ES rallied from 4412.00 up to 4422.75 and settled at 4421 on the 5:00 futures close, up 26.75 points or 0.61% on the day.
In the end, it was one of the lowest volume days of the year. If you take out the extended trading hours it was the lowest day of the year and you could tell during the session.
In terms of the ES’s overall tone, there was a total absence of selling. In terms of the day’s overall trade, total volume was less than 750,000. The CME must be crying.
Our View
The ES has rallied 60 points since Tuesday’s low at 4365.25. Like it did on the downside, the ES ran a lot of buy stops yesterday — but there are a lot more to run. Yesterday, the S&P notched its 43rd record close of the year despite falling jobless claims and more than 120,000 new cases of Covid-19. I am not going to try and guess today’s jobs numbers.
What I will say is, if the ES gaps lower tomorrow, my lean would be to buy the open or the first dip below. I can’t rule out selling a gap up open, but I prefer buying over selling.
There is a lot of open interest at the 4440 to 4450 level and that’s a spot the S&P may be headed. My old rule was to fade the gaps if there is 300,000 to 400,000 ES traded before the 9:30 open but that’s not going to happen — the volume is just too low.
Lastly, I understand people want to get up and go. I call this the “Covid-19 Jailbreak.” I understand it, but please take extra precautions. Don’t let your guard down. Hospitals in Florida are full and oxygen is low. I personally am staying out of any indoor bars or restaurants. The main reason, I don’t want to get anyone in my family or friends sick. Have a good weekend and we will see you next week.
-Danny
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
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