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Our thoughts and prayers go out to anyone who may be affected/infected by the devastating virus that is spreading. Last check, 65,247 infected with at least 1,491 deaths. That’s up 928 than last Friday.

PREVIOUS DAY — THURSDAY, FEBRUARY 13, 2020

On February 13 price opened at 3362 6/8, 17 6/8 handles down from settle. 

CASH opened just below the low of the previous day. We had a strong rally but the NEW DEFINITION of the contra virus changed the mood to a bearish tone as just after settle price dropped about 10 and a half handes or so.

Now that the traders had time to mull it over the question was; “Is CASH ready to accept that as value?”

The Wyckoff Wave opened in the middle and under the close of yesterday’s trading range. Selling appears more effectual than buying. Overall DOW 30 does not appear to be in agreement as average NY tick checks at plus 250 ticks.

At 10:00 EST selling pressure peaked as Fair Value turned +8 then +9 and higher (Fair Value was 0.56). I had given 3369 as the first level. The Algos appeared to be in agreement as two Sell Programs emerged at about the 9:58 marker. 

On the Tape Reading Chart, no long trader desired to be around that 3370 handle as $1.2 MM in trade value and 12,100, 11,500, 13,100 and 15,000 lots were offered out as price fell 10 handles in a minute or two from those levels where price quickly became oversold and shorter-term weak bulls took control.

The day could have traded in a range set by the first thirty minutes of trade but the volume at the lows was too great and price pushed up to higher highs and then sold off a bit.

For more detail please review the Market Recap Video

LOOKING FORWARD — FRIDAY, FEBRUARY 14, 2020

Great moves are usually followed by good moves. Expect more of the same. Trump’s impeachment is losing traction. The market is gaining traction. So, so great for the opposing party. Unless…they find another shoe to drop! (Jan-7)

My notion is the same that I said last Friday, there is selling going on. At the highs yesterday, I heard BRK.A (Mr. Halfway Himself) taking off 10 shares at a time. At those highs 340,625.00 and the closing print 339,470.00 handle. That’s 1,155.00 to the downside. You tell me was he buying?

We can always expect a move up (upthrust) after distribution. And yes it keeps going up. Currently, by my eyes, we are looking at 3383 overnight Globex. The question might be; “Who wants to go home long over the weekend with the COVID-19 (coronavirus)?”

As you can see this is issue number 609. I’ve written 609 issues and have given our faithful subscribers over 3,933 points to date with 553 trades since August 8, 2018. Just this week our subscribers have been very lucky with the levels given: 5 points Monday, 22 points Tuesday, 8 points Wednesday, and 11 points Thursday. Total for the week 46 points, that would be $2,300 on 1 lot and $6,900 on 3 lots. 

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. Click the link below to learn more.


Economic Calendar


Closing Prices


In the Tradechat Rooms

The MiM

A selling kind of mood set in on the close hour.  We saw NQ which was down and ES which was up decide to reunite with strength in NQ and weakness in ES.  Our imbalance was moderate to the sell-side but had a decent buy at 1.1B but only 58% of the symbols were to the buy-side.  That is not wholesale buying, in fact, it was quite selective.

HFT Alert

Overall, 15 programs with 11 sells and 4 buys.  Again, most of the action was in the closing hour with sell programs dominating. 


Chart of the Day


Top Stories on MTS Overnight:


Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 3382.50Opening Print: 3363.00
Low: 3348.50High 3384.75
Volume: 470,000Low: 3359.00

ES Settlement: 3377.50

Total Volume: 1.7 M

S&P 500 Futures: Buy the Bad News Dips / Fed Cuts Overnight Repo Operations

The ES made a high at 3382.50 on Globex and sold off 35 handles down to 3348.50 after a headline hit the tape saying that the coronavirus numbers were much higher than China had been saying. The ES short covered 20 handles and traded  3363.00 yesterday on the 8:30 CT futures open and then shot up to 3370.50 a few minutes after the open. After the high, the ES pulled back to the 3366.00 area, rallied back up to a new high at 3371.75, then dropped back down to the 3359.50 area, traded back up to 3368.00 and then dropped down to the 3364.50 level and then blasted up to a new high at 3380.75 and that’s when I put this out : IMPRO: Dboy :(12:21:30 PM): I think we are at or near the high of this push. After my post, the ES popped up above 3380.00 and then dropped back down to  3373.50 and then rallied back up to new highs at 3384.75. After the high, the ES sold off down to the 3371 area after a headline hit saying the Fed was going to cut back on its overnight repo operation. 

At 2:30 the ES traded 3376.75 as the MiM showed $500 million to buy, traded 3374.75 on the 2:50 cash imbalance as the final MiM showed $1.1 billion to buy, traded 3376.00  on the 3:00 cash close and settled at 3377.75 on the 3:15 futures close, down 2.75 handles or – 0.08-% on the day. 

Despite the big overnight drop, the ES’s overall tone was firm until late in the day when the Fed’s repo headlines hit the tape. In terms of the day’s overall trade, total volume was 1.73 million with 460,000 of that coming from Globex making the total volume 1.27 million contracts traded on the day sessions.

Our view: 

Mid-Month Rebalance And Presidents Day Holiday

The ES sold off hard and then rallied hard. In the end, I think the algos have this nailed down. Out goes the coronavirus spread headline Wednesday night and the ES sells off 31.5 handles on ‘oversized’ Globex volume of 470,000 contracts. The question is, what happens when this occurs? The answer, most people that sold got short at low prices and then they put in protective buy stops above the market. Once the selling subsides, the same HFT and algorithmic trading programs that ran all the sell stops retarget the upside stops. It’s the same story over and over, the S&P takes bad news and makes good of it. 

Our lean, the day before Presidents Day (Valentine’s Day) has the S&P up 11 of the last 17 occasions. My guess is if the ES moves higher on Globex we see 3400+ today. As always, you can sell the early rallies and buy the pullbacks but my overall lean is to just keep buying the pullbacks. The wild card is how the market reacts to the fed cutting back on its repo purchases.  


Market Vitals Technical Analysis

Did you know that your premium membership gives you access to our Market Vitals? Click on the image below and get today’s key levels.

Click to access today’s values

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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Danny Riley (3417 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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