| Here’s a video update from last night covering yesterday’s ES entry, AMD’s exit and DOCN’s big pop. Even if only one of those assets is of interest to your trading plan, please consider giving it a watch. Happy Friday!The /ES Futures Low. Taking Profit in AMD. DOCN Pops on AI Hopes. |
| Our View |
| Today is FRY-day, the jobs report and the Week 1 options expiration for July. |
| There is net short bias based on $3.8 billion in puts bought and $2.3 billion in long calls. Option gamma will play a big role in this, but we won’t know about that until later today. |
| The stats indicate that July Fridays are up 65% of the time — except on the monthly Opex, which is down. |
| I can’t emphasize rates and yields enough. That’s as expectations continue to climb for a rate hike at the Fed’s July meeting, which is now north of a 92% probability. While the market is not panicking on that news, the fact that 10-year yields have rallied almost 6% in two days and are back above 4% should be a warning sign. |
| Coupled with yesterday’s 90% downside volume day and that may be a sign for bulls to ease off the gas a bit. |
| Our Lean |
| Rates and yields aside, the jobs report and today’s expiration will control the tape. |
| I have noticed a pattern on jobs FRY-day and while it may work in both directions, I think it works better on the long side. If the ES gaps lower on the 9:30 ET futures open, you buy the open or the first pullback under the open, put in a stop and hold — in some cases all day. |
| This will hold especially true if there’s oversized volume on Globex before the open. In turn the opposite could also work on a gap up. |
| I think yesterday’s selloff added more shorts to the mix as well. If that’s the case and we see a big selloff pre-open, I’ll be looking at my plan from above. |
| As for levels, I’m looking for support at 4420, 4405, 4380-4475, 4468 and finally 4351. |
| For resistance, I’m looking at 4451-4453, 4461, 4475, 4480, 4491 and 4499. There are stops from 4501 up to 4512. |
| MiM and Daily Recap |
| The ES traded down to 4442 on Globex and opened Thursday’s regular session at 4443.75. After the open the ES sold off down to 4419.50 at 11:26 and then rallied up to 4445.75 at 1:34. I know you are probably looking at this and wondering where the time went — and while there were some short covering pops and drops early after the early low at 4419.50 — the ES just ground higher. Most pullbacks were 3 to 5 points, with the largest one from 4436 down to 4431.75. After the high, the ES had another very minor pullback, rallied up to a 4447.25 ‘double top’ and had another 5-point pullback down to 4442. |
| After the dip, the ES made a new high at 4451 at 3:09 and had ‘another’ 6-point pullback to the 4544.50 level at 3:36 as the early imbalance showed $300 million to buy. The ES traded 4447 as the 3:50 cash imbalance showed $2.2 billion to buy, traded up to 4449.75 and traded 4446.50 on the 4:00 cash close. After 4:00, the ES chopped in a narrow range and settled at 4455.75 on the 5:00 futures close, down 39 points or -0.87% on the day. |
| This was the S&P’s biggest one-day dip in six weeks. |
| In the end, it was all sell programs early and all buy programs after. In terms of the ES’s overall tone, it didn’t act that bad despite being down on the day, but it also had a problem getting through 4450. In terms of the ES’s overall trade, 337k ES traded on the Globex session and 1.32 million contracts traded on the day session for a grand total of 1.657 million contracts traded. |
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| Technical Edge |
| NYSE Breadth: 10% Upside Volume (!!)Advance/Decline: 14% AdvanceVIX: ~$16 |
| A 90%+ volume day always has me taking notice. Had the Advance/Decliners been 90%+ to the downside, that’d be our 90/90 downside days and would really have me shifting perspective a bit. |
| On its own, it’s not a big deal, but as we covered the other day, TNX (yields) are breaking out and are now above 4.00. Today will be dominated by other factors, but this is something to take note of if 10-year yields stay above 4%. |
| SPY |
| The jobs reaction will either have the SPY pushing yesterday’s high and the gap-fill near $442 or probing yesterday’s lows. If it’s the latter, we’ll have to see how the 61.8% and 21-day sma hold up. |
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| Upside Levels: $440, $442 gap fill, ~$444 resistanceDownside Levels: $436, $434, $431.50 |
| S&P 500 — ES Futures |
| Held that 4415-20 zone perfectly. Now the jobs report runs the show. |
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| Upside Levels: 4466-68, 4480-85, 4490-93, 4520Downside levels: 4415-20, 4395-4400, 4370 |
| SPX |
| Upside Levels: 4436, 4450-60Downside Levels: 4385, 4375-77, 4350-55, 4325-30 |
| NQ |
| Our pivot remains the same based on the close, while 15,360 held within a few points as Thursday’ high, so it remains relevant today as well. |
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| Pivot: 15,250 (same as yesterday)Upside Levels:15,360, 15,425Downside Levels: 15,075-100 (61.8% + 21-day sma + y’day low), 14,975 – 15,000, 14,850 |
| QQQ |
| Traders who bought the gap-fill and 50% retrace yesterday only took about 30-40 cents of heat before a nice bounce propelled the Qs higher. That was a great R/R buy, particularly as the Nasdaq breadth was tracking considerably higher than the NYSE (50% upside vs. just 10% upside, respectively). |
| Now let’s see what side of yesterday’s range they push. |
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| Upside Levels: $368-68.50, $370-$371, $373Downside Levels: $364.50, $363, $360.50 |
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| Open Positions |
| Bold are the trades with recent updates.Italics show means the trade is closed.Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.** = previously mentioned trade setup we are stalking. |
| Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM, AMZN, CVS and AMD. |
| INTC — Long from $33.75-ish, added at $32.10. We rarely add, but as mentioned on Friday, “In hindsight, ~$32 was a better buy spot than $33.50 to $34.”Cost basis: ~$33Have had several trims above our basis. Stops at Break-even or $31.75 hard. Those who stick with it, $34.50 to $35 is the next profit target.DOCN — ½ position* at $38.25 — Able to make small trim at $39.75 to $40 and a second trim above $40.75 (near gap-fill and declining 10-ema).Should be down to about a 50% to 60% position. Break-even stop.13% pop yesterday, should have gotten investors another trim or two. $43.50+ and ideally, $45+JPM — Retested the breakout zone — bulls can wait for a test of the 10-day before getting long. This is a long-term swing.TLT — gap-filled at $99.65 — first trim is $100.75+, then $101.50 to $102. Can run a tight stop on this if desired, ~$98.We are playing the support area & the gap-fill. If it doesn’t hold, the $95s, then $92s could be in play and we don’t want to get trapped in the pain trade. |
| Go-To Watchlist |
| Feel free to build your own trades off these relative strength leaders |
| Relative strength leaders → (List is growing long!) |
| Growth stocks ARKK — DOCN, SOFI, UPST, SHOPLLY, CAHAI stocks — NVDA, AMD, AVGO, ADBE, SMCIMega cap tech — MSFT, AAPL, META, CRMSelect retail — CMG, ELF, LULUHomebuilders ITB — TOL, KBH, DHIBRK.BABEV, DXCM (nice breakouts)Cruise stocks — RCL, CCL, NCLHDAL, DT, AMAT |
| Relative weakness leaders → |
| PYPLMETCF, MOSPFEEL, FL, DG |
| Economic Calendar |
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| Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security. |
| Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck! |
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| Options Fry-Day & The June Jobs Report |
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