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 1 (CD1): Price declined to projected range level (4512), where buyer’s responded. Balancing Day unfolded since the prior session was an uptrend day. Range was 29.75 handles on 1.324M contracts exchanged.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2 (CD2): Part of the rally from CD1 low (4512.50) is in place, so price may continue to pause before the next directional thrust. As such, estimated scenarios to consider for today’s trading.
1.) Price sustains a bid above 4520, initially targets 4530 – 4535 zone.
2.) Price sustains an offer below 4520, initially targets 4512 – 4506 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 2 (CD2)
Thanks for reading,
PTGDavid
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Baxter
Baxter is our new AI trading helper. This data is early, new, and not very well tested but we want to share some of our findings. We are concentrating on the SP500 which should benefit ES futures and SPY traders.
Yesterday:
Baxter wanted that high to be between 12:00 and 15:30. The actual high came in at 11:52. There was an attempt to put in a new high around 12:27 but that fell a tick short so half a bone on the high call.
For the low yesterday, he favored another opening low which was correct so a full bone there.
Today:
For the day’s highs, Baxter is 60% confident of it coming in between 10:00 and 15:30. That is a large range of time so not much help. His call is the 12:00 to 15:30 time slot with about 33% confidence.
Our low-time model broke overnight. I will update here when/if we get it running today and tweet it out. Stay tuned.
Chart of the Day
S&P 500 faces three scenarios after seven months of gains
What will happen to the S&P 500 Index after seven straight monthly gains, a milestone that the U.S. equity benchmark is about to reach? History points to three possibilities. Fourteen streaks of seven months or longer have occurred during the past 60 years, according to data compiled by Bloomberg. Five ended the next month as the S&P 500 fell. Another four were followed by gains of no more than 3.2% before the streaks ended. The other five delivered advances of 9.7% or more before they concluded, including the most recent streak, which lasted 10 months and ran through January 2018.
Our View
The ES traded up to 4542.25 on Globex and opened Tuesday’s regular session at 4524.50, upticked, and sold off down to 4512.50 going into 10:00. It then rallied back up to the VWAP at 4525.50.
The ES pulled back down to the 4520.25 level and then pushed back up to 4528.50 at 11:23 am. The ES dipped down to the VWAP a few times, made a lower high by 1 tick, and then dumped down to 4517.50 at 1:42.
After some sideways price action, the ES traded back up to the VWAP at 4523 just after 3:00 and dropped back down to the 4515.50 at 3:31 as the early MiM showed $1.3 billion to sell. After the push down, the ES rallied back up to 4522.50 as the MiM went out to $1.46 billion to sell.
The ES traded 4520.50 as the final 3:50 cash imbalance pared down to $836 million to sell and after a bunch of sell imbalances showed up, the ES dipped to 4517.50. It traded up to 4524 at 3:58 and traded 4524 on the 4:00 cash close.
On the 5:00 futures close the ES settled on the high of the day at 4528.50, down 2 points or -0.04% on the day.
In the end, the pullback — or in the case, simply a lower close — was well deserved, but the net change ended up being minuscule. In terms of the ES’s overall tone, there was some selling but it was by no means overly large. In terms of the ES’s overall trade, volume was a little better at 1.33 million contracts traded.
When The Fed Raises Rates to 3%, What Happens Then?
I know this is not going to happen overnight, but what happens when the government runs up the nation’s debt to $25 to $30 trillion and the Fed raises rates to 3%? It means paying it down will be impossible and if inflation increases significantly, rates will go even higher. I am not and do not pretend to be an economist, but I don’t think you have to be, all you have to do is look at Japan. Their stock market has NEVER gotten back to the 1989 highs. Yesterday the Wall Street Journal said that over one-third of Millennials are going back to work. Has the Covid-19 pandemic permanently changed how people work forever? It sure looks that way.
Our View: After making its 54th record high close on Monday, the ES had a slight pullback yesterday and took back nearly all of the losses late in the day. I had a feeling the ES was not going to go straight up to 4550 and yesterday seems to have been a consolidation day. That said, I think the short term risk is to the downside. Our Lean: Sell the early rallies and buy the pullbacks but be on the defensive side. Lots of sell stops under 4517 all the way down to 4496. On the upside if the ES can hold above 4530 I think it’s a clear shot to 4550-4555.
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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