Market Review
Topic: Taylor 3 Day Cycle
Author: David D Dube (a.k.a. PTGDavid)
Website: Polaris Trading Group
Tuesday’s Session was Cycle Day 2 (CD2): Price continued its decline fulfilling low range target 4365, at which time strong reversal unfolded, closing in the upper quartile of a session. This type of day we refer to as a “range-runner”. The range was 51.75 handles on 1.275M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): As long as price is bid above CD1 Low (4377.25) anytime during the RTH session, cycle statistics will be fulfilled. Then it becomes a “wild-card” day as anything goes directionally. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4405, initially targets 4415 – 4420 zone.
2.) Price sustains an offer below 4405, initially targets 4390 – 4385 zone.
*****3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 3 (CD3)
Thanks for reading,
PTGDavid
S&P 500 Futures Recap – Trade Date August 3, 2021
Economic Calendar
Closing Prices
In the TradeChat Room
Market On Close : Still more room for buyers. $2.2B to by on the MOC
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: Buy programs lift the tape into a bullish close
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 back!
On yesterday’s Baxter predictions he called the low range pretty well as price dipped 1.6 points below his low call. He did get a biscuit for that as it is a necessary part of the training. On the upside, he under-predicted by a large 17.5 points. I didn’t have the heart to trigger his collar so no biscuit.
For today, he is calling for a 32-point range with prices staying above 4,400 on the ES and topping out around 4335.
Chart of the Day
S&P 500 streak of lower pension-return estimates turns 10
China’s clampdown on U.S.-listed companies is having a bigger effect on emerging-market stock investors than it would have years ago. The country’s standing in the MSCI Emerging Market Index leads to this conclusion. Chinese stocks rose as a share of the benchmark for 10 straight years before slipping in 2021, according to data compiled by Bloomberg. Last year, their combined weight rose above the S&P 500 Index’s peak of 34.9% for technology stocks in March 2000, when the dot-com era ended. MSCI’s index ended the year with a China weight of 36.3%
Our View
S&P 500 Downside Headfake / Stop Run And RIP
Tuesday was a range-filled, back-and-forth day with plenty of two-way action. Early on, the ES and NQ led us to believe we could be puking lower. But they both ran right down to the 21-day moving average — which was flagged in the MTS chat — before ripping higher.
The ES futures rallied on Globex Monday night into Tuesday morning, making an early high at 4397.25, sold off a bit and traded 4389.00 on the 9:30 ET futures open and then dropped down to 4365.25 — the “puke” I just mentioned.
That’s a 23.75 point drop in the first 43 minutes, while the 21-day moving came into play about two points lower.
After the low, the ES rallied 20.5 points up to 4385.75 at 10:51. The ES then fell into a 5-point back-and-fill pattern for the next 45 minutes and then the ES did what it does best, ran the buy stops all the way up to 4401.50. Suck in all the shorts, then run the stops on them.
As the MIM started to show over $300 million to buy, the ES traded up to 4414.75, dipped to 4410.50, and then traded 4412.50 as the 3:50 cash imbalance showed $2.25 billion to buy. It then coughed up two 2.5 points before making a new high at 4417.00, and then went back down to 4409.50 and settled at 4408.75 on the 5:00 futures close, up 29 points or + 0.66% on the day.
In the end, the shorts got run over. In terms of the ES’s overall tone, it was firm all day with the exception of the first hour. In terms of the day’s overall trade, volume was in line with the last several days at 1.275 million contracts traded.
It is absolutely hilarious to me that any time I go all-in on the short side, the markets reverse higher. I should have remembered three things:
- The mutual funds tend to buy on the last day of the month and the first 2 to 3 days of the new month.
- The ES was down two days in a row and in four of the last five. As I always say — the ES can close down one day, maybe two days, but three-day selloffs are hard to come by. A down day would have made it three in a row and five down days in a six-day stretch.
- And lastly, Don’t fight the Fed/trend.
I was short the ES at 4392.50, I covered 1 at a 9-point profit and the other at a 6-handle loss, but I made a few good long NQ trades that made up for the debacle. In fact, a number of MTS traders had a field day on the NQ and ES with all that morning action. I made sure to tell them to hold on to those gains, too. The worst feeling is crushing the open and giving it all back during the “lunch-time chop.”
At the lows of the day, I posted this in the MTS chat :IMPRO: Dboy :(10:13:43 AM): going to see a bounce
Little did I know that the ES was going to rally 52 points!
Our view: As soon as everyone gives up on the short side and gets long into the rally, the ES will pull back. The big question is essentially the Opening Print title from a few days ago — Weak Seasonal Stats vs the Fed?
Right now it looks like the Fed is winning.
There is simply too much liquidity being dumped into the system on a daily, weekly, and monthly basis. I know they keep talking about talking about tapering, but even when they do, they won’t shut off the spigot overnight. We continue to drift near the highs and that creates the urge to not be long, but so far, the trend and the Fed have been right and the dips have been bought.
Our lean, sell the early rallies and buy the pullbacks.
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