Premium OP: ES Down 280 Handles In 3 1/2 Days

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Polaris Trading Group: Taylor 3 Day Cycle  Commentary     
Author: David D Dube (PTGDavid)

Prior Session was Cycle Day 2 (CD2)…The past few sessions’ price declines have been historic and one for the record books. Decline on CD2 easily exceeded 10 years of recorded extremes since we began publishing the 3-Day Cycle Report. Posted in the Trade Room; “PTGDavid :(2:26:39 PM) : I’m thinking 3118 – 3120 might be an interesting zone for Long probe”  Turned out LOD was 3117.25. When price hits 8 Sigma Extremes, you “gotta buy’em!”

This leads us into today’s Cycle Day 3 (CD1)…Price is well below Cycle Day 1 Low (3213.75) and MUST RECOVER to fulfill Positive Cycle Statistic. Given that the prior cycle failed and increased likelihood of a second failure, typically this has signaled the beginning of a corrective market phase.   

Link to access full Cycle Spreadsheet >> Cycle Day 3

Good Trading and Honor Thy Stops!


Economic Calendar

Closing Prices

In the Tradechat Room


Roller coaster into the close.  It is hard to truly realize that the peak to trough is over 30 S&P points.  Remember last summer when 10 points/day were the norm? Early indications came in via our MIM and others in the MIM room of a large sell.  I have to say, that it is not just the data that is our strength but the sharing of our sell connected community. You should not trade as an island. 

The MIM started showing a pair-off during the last 30 minutes and the markets seemed to settle a bit.  Although our reveal was a decent 2.3B to the sell side, that was quickly bought off by the D-quotes at 3:55 pm.  There are buyers out there and there are certainly great buys for you picker, there are a lot of babies sitting out on the lawn drenched in bathwater. Netflix ($NFLX)  was down 2.3%. You have to ask yourself, are we going to watch more or less Netflix if we are quarantined? Seems pretty Covid-19 proof.

Thermo Fisher ($TMO), builds the equipment for the Covid-19 test, that is down  4.2% today. The passive investors don’t care, it is what the SP500 is doing. The smart long-term investors are going to pick up the babies and hold them to maturity. 

Get the skinny when we get it.  Join the MiM. 


Starting at 11:30 am ET the programs kicked in and started pushing the market around.  We did a total of 162 programs for the day, 74 buys and 88 sells. 

Chart of the Day

Top Stories on MTS Overnight:


(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 3259.50Opening Print: 3240.25
Low: 3214.25High 3247.25
Volume: 736,000Low: 3221.25

ES Settlement: 3132.50

Total Volume: 4.3M

S&P 500 Futures: #ES Meets The #COVID-2019 Pandemic

The ES traded down to 3214.25 on Globex (higher low) and rallied up to3259.50 on Globex with a total of 736,000 futures traded. On the 8:30 CT futures open, the ES traded 3240.25, rallied quickly up to 3247.25 and then dropped 25.75 handles down to 3221.50 at 8:46 am. After the low, the ES traded up to the 3235 area. After the pop, the ES sold off down to 3201 after a headline reported the first cases of the coronavirus in Switzerland and then sold off down to 3195.75 and then rallied back to 3212 and then another headline came out saying: HEAD OF JOINT WHO-CHINA CORONAVIRUS MISSION AYLWARD SAYS VIRUS IS A RAPIDLY ESCALATING EPIDEMIC IN PLACES, HAVE TO TACKLE SUPER FAST TO PREVENT A PANDEMIC and then the ES dropped down to new lows at 3185.25, the exact level I talked about in the View part of the Opening Print last night (3180-3190). After another bounce back above 3200 the ES got hit by another big sell program that pushed the ES all the way down to 3176 at 10:320 am. After that low the ES traded up to 3197, 21 handles off the low and then reversed back down to the 3166.25 level going into 12:00. The ES then traded up to the 3176 area and flunked down to another new low at 3162.25, bounced up to the 3166 level and then made a new low at 3157.25.  The whole day was a series of new lows, small bounces, and then new lows. Going into 1:00 the ES got hit by another sell program that pushed it down to 3131.00, down 76.75 handles or -2.9%, all in a matter of minutes. I do not think I have seen anything like that since the height of the credit crisis. The ES bounced 4 or 5 handles then broke down to 3121.25 then ripped up to 3147 at 1:55 CT.  

At 2:00 the ES traded 3150 as the early MiM showed $1.7 billion to sell and then rallied up to the 3153.50 area. At 2:30 the ES traded  3127.59 as the MiM showed $2.2 billion to sell. On the 2:50 cash imbalance, the ES traded 3128 as the final MiM showed $2.2 billion to sell. On the 3:00 cash close, the ES traded 3126 and settled at 3133.50 on the 3:15 futures close, down 93.5  handles or -2.90% on the day.  The NQ settled at  8854.25 down 236.75 points or 2.6% on volume of 1.3 million.

In terms of the ES’s overall tone, it was the worst since the height of the credit crisis. In terms of the day’s overall trade, total volume was HUGE / OVERSIZED. Total ES volume was 4.2 million with 763,000 coming from Globex making total day volume 3.44 million contracts traded on the day session, the largest volume since the credit crisis.  

Our view: 

#ES Down 280 Handles in 3 1/2 Days

There are two things that kill investors. The first is thinking you know more than the markets and the second is complacency. I have always been a ‘bull market’ guy and I knew there had to be a stock market ‘tipping point’ and that came in the form of the COVID-2019 coronavirus. When the Fed started adding QE4 in October of last year and rates at 1.5%, I had a feeling that the US Central Bank was using up some of its remaining bullets. As the S&P rose going into the end of 2019 and rallied sharply in the first two months of 2020 I had a feeling the markets could not keep going up and when the China coronavirus headlines started hitting the talk of the chain line being cut I knew I smelled a rat. From last Wednesday night’s Globex 3397 high (or only 3 1/2 days ago) the ES has fallen 380 handles. I am not going to do a big view today. I think we all understand the consequences of the virus to the population, the world, and the stock market, none of it is good.  

Our view, I think the odds of trading down to 3040 -3050 (PitBull trendlines) are very possible and ES 2900 is still my target but, and I believe there are always buts when it comes to trading the ES. Meaning after a 280 handle drop in 3 1/2 days is extreme. I think the ES is oversold short term. This does not mean the bottom is in it means I think we could see some type of bounce tonight and today. Can it come from lower prices? Yes but my feel is for a pop. I’ll leave it at that. 

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Danny Riley (3463 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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