Market Review
NJ – The Discovery Trading Group
Who knew Mondays were so exciting? Mondays the last few weeks have certainly provided a good bit of drama. The ESH20 spent much of GLOBEX limit down 145 points @ 2819. Upon opening, the S&P 500 cash almost immediately hit its 7% curb limit and trading halted for 15 minutes. Less than 2 minutes after trading resumed at about 9:50 am ET, the ESH20 hit its LOD @ 2715. The one curb was all that was needed as neither the ESH20 nor S&P500 cash moved down far enough to trigger a second. By lunchtime, the ES found its 2836.75 HOD, then spent the day working back towards the 2715 low. You won’t see a chart like this every day…
The ESH20 is now at levels not seen since Feb 2019, thus in a little over 3 weeks, over a year’s worth of gains have evaporated. Volatility remains crazy high with a 5-day ATR @ 165.75 ES points. Interestingly enough, the ESH20 volume was less than on Friday and bulls bought into the selloff. I don’t think the overall market selloff is anywhere near over, but it’s good to see buying or the day’s selloff could have been much bigger.
As a side note: Thursday is ES rollover day when the June contract becomes the front month. Thus for the following week, ES volume will be divided between the March and June contracts which will add to the short-term volatility.
Thanks again for reading. For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com
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MiM
The MIM, for such a rocky day, was very tame. The reveal came in at 3.3B to sell and the drain was open and down we fell 52+ points into the close. We should rally tomorrow. Our increased testing on CV19 will bump up our numbers and that will take some digesting, but again, the index sold and not everything on the index is vulnerable so there will be some cherry-picking tomorrow.
Get the skinny when we get it. Join the MiM.
HFT Alert
Surprisingly not an extremely active day for program trades. One of the downsides to Algos is they can switch their liquidity on and off in a second. That is their biggest danger to the market.
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2966.00 | Opening Print: 2762.00 |
| Low: 2819.00 | High: 2836.75 |
| Volume: 314,000 | Low: 2715.00 |
| ES Settlement: 2747.75 | |
| Total Volume: 2.5M |
S&P 500 Futures: #COVID-19 Black Monday
On Globex, the #ES traded up to a high of 2966.00 Sunday night and sold off down to 2819.00, down 5% or ‘limit down’. The ES traded 2762 on the open “limit down” or -7% and on the reopen, then dropped down to an early low of 2715. The ES then rallied 105 handles up to 2820 at 9:20CT, and then reversed back down to 2774.25 at 10:05CT and then “popped” up to 2836 at 10:55CT. After the high, the ES pulled back down to 2810.75 at 11:05CT, then rallied to 2836.75 at 11:15CT and then sold off 102.5 handles to 2734.25 at 1:10CT. The ES rallied to 2769.50 at 1:20CT, then pulled back to 2728.25 at 1:45CT, then rallied up to 2775.50.
At 2:00 the ES traded 2760 as the early MiM showed $1.44 billion for sale and then the futures sold off down to the 2751 area and rallied up to 2780 at 2:37. The ES traded 2737.75 at 2:50 as the final cash imbalance showed $2.85 billion to sell and traded 2730.00 on the 3:00 cash close and settled at 2748.75 on the 3:15 futures close, down a whopping 215 handles or -7.25% on the day.
In terms of overall tone, it was deplorable. The VIX traded up to a high 62.12, I think that says it all. In terms of the day’s overall trade, total volume was LOW at 2.5 million with 314,000 coming from Globex making total day volume 2.186 million contracts traded on the day session.
Our View
#XLF #XLE Banks and Oil Stocks Get Crushed
I will never forget this. In early 2007 the PitBull told me that there was “rotten wood floating around in the stock market leaders”, the banks and brokerage stocks. That comment has been stuck in my head ever since. Over the last few years, I believe the market leaders have been 4 stocks: AALP, MSTF, AMZN, and GOOG, but in the last few days, some new market leaders have been getting crushed, the banks and oil stocks. JP Morgan traded above $141.10 on 1/02/2020 and closed yesterday at $93.30, down $14.78 or -13.68%. Morgan Stanley, who announced it was buying E-Trade for $13 billion on February 20 traded up to a high at $57.57 on 01/17/2020 and closed down $4.57 or -10.92% at $37.27 yesterday. Energy company Halliburton (HAL) on 01/06/2020 made a high of $25.47, closed down $5.11 or -39.14% yesterday and Schlumberger NV that traded $41.75 on 01/06/2020 closed down $6.35 or down -27.40% on yesterday’s close at $17.32. On 02/19/20 the XLF, the Financial Select Sector SPDR Fund made a high at $32.21 and closed yesterday at $22.57, down $2.98 or -11.66%, down -26.67% YTD and the XLE, the Energy Select Sector SPDR ETF that traded $55.35 on 02/12/2020 closed down $8.94 or -21.04% yesterday and is down 44.10% YTD. I have never thought of myself as a stock picker but these two sectors (energy 5.4% and the financials make up 14%) make up over 20% of the weighting of the S&P 500 and when you throw in technology at 20% you’re talking over 40% of the S&P. Oh, yea and we can’t forget health care which is 15.8%. So between those three sectors, they make up just over 65% of the S&P.
I honestly do not know what’s going to happen next but what I can say is that as of yesterday’s close the S&P is down 24.7% since making its February 19th 3397 all-time contract high, it has dropped 682 handles in 13 sessions or a loss of 52.4 handles per day. As they say, the S&P always goes down fast then it goes up but this has gotten out of hand.
Funny Things Happen On Full Moons
Right now no news is good news and the news seems to be getting worse. Yesterday, March 9th, is 11 years to the day of the 666 credit crisis anniversary low and you know what? This decline has been way faster! I am finishing the Opening Print and it’s just after 5:00 CT and the ES just sold off down to new lows at 2695.50. According to Bloomberg, 500 of the world’s richest people lost a combined $203 billion in the first 96 minutes of trading after yesterday’s open. And just now, the State of New Jersey declared a “state of emergency” due to the coronavirus. Our view, last night was supposed to be the brightest full moon of the year but it’s surely not shining on these markets. Yesterday’s 7% stock market fall was the Dow’s worst performance since 2008. All 11 sectors in the S&P 500 were down, led by energy, which slid 20% and financials were down 11%. I am going to stick with the same thing I have been saying, this is not over but I have no doubt the ES can rally but I doubt they can hold. As long as the big institutional accounts are selling and the headlines continue it’s going to be a very difficult time for the stock market. Can we see a 1 or 2-day rally? Sure, but it will be new lows after that.
Market Vitals Technical Analysis
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