Market Review
Ten years from now as you look back on this decade the year 2020 will stand out as the year that started it all. By then, cars will be driving themselves and the drones will be flying. Most likely all the folks in the nursing homes would have left us and children will be grown or at least in their twenties.
Everyone is pointing their finger at China and the World Health Organization. I noticed it on January 21, 2020. Well, really I noticed it in December of 2019. We were banking great profits but the market was struggling to find higher highs. The market gave us a hint on February 20 when price lost six days of lows and then sprang back to the halfback.
A few days later, all hands abandoned ship. Institutions were buying on the lows and the breaking of the supply line on April 1 through the 3 markers. April 14 price respected the overbought line and pulled back a few days.
Last night Globex got over their skis by taking out the high of April 14 and April 15 markers. Now they’ve gotten themselves in a quandary. The low of February 28 has been breached. The Composite Man will need to lift the offers from 2848, 2864 up to 3000 handle…
Just to get back up to the 3400 handle where it all started. With Trump jump-starting the economy in/with phases (I’m sure you’re aware) we have yet to find a solution. It’s Occam’s Razor at it’s finest. The Denver Post had an article that stated most cases were found in nursing homes. And now there’s talk that perhaps it was not a bat cave but a secret lab?
Looking at the daily I see the same schematic Wyckoff gave us to outline the precipitous decline of the 1930’s Stock Market Crash. He’d call this rally hyperdomerics. That is if we lose the bottom on the March 23 marker. I’m not saying that will happen but a lot of pundits are. Perhaps I am. It’s really no great feat to climb back up this wall of worry with the Algos.
There would be little supply at the 3400 handle due to the forced liquidation seen on February 24 and February 25. If we take out that 3400 too soon, that would indicate that this drop could have been a Potential Preliminary Supply in a longer term picture…
If we lose the lows of March 23 then Potential Preliminary Support then soon to follow would be the Selling Climax. If we jump start the economy then the former. If we get a relapse by jumping too soon the following… Wyckoff always saw things as a potential until they were not.
I can only be reminded of that William Shakesphere comedy, “All’s Well that Ends Well”. That will be the title of my memoirs that I will write in 2030. It may just take that long to get to the end.
If Cash follows the Peons up higher, what will 22,000,000 unemployed people do? The first batch of $1,200 deposits hit the bank accounts Wednesday. Perhaps sales of PlayStations, 65-inch plasma TV’s will go up? Yet I can’t find Charmin on the shelves…
Three weeks in a row price rips up on horrible unemployment numbers. Four percent and climbing. If that’s not hypodermics then what is? The Great Depression was 14 to 24 percent. And they did not have PlayStations, TV’s, or Charmin?
LOOKING FORWARD — FRIDAY, April 17, 2020
We’ve passed the normal tax deadline and instead of paying taxes, folks get $1,200 or more and unemployed get two-thirds of their weekly pay and $600 a week extra to boot. Looking at the daily I see volume coming in at the lows of 2200 handle and price is moving up on half the volume. And everyone is talking about the “New Normal”?
This week I had the cycle bearish. If buying pressure works really hard today, price could pierce the overbought line. Average volume in Emini is around 1.2 to 1.5 million shares If we can only muster 0.72 (720K) that would not be a great bull story.
The Wyckoff in me wants to see a pull back to shore up the price!
At 16:00 accumulation volume took out the resting offers. Then price gapped up from the 17:00 to 18:00 marker. Now we are in a tight trading range, 2860 to 2885 handle. We put in a base at the 2750 handle for 32 hours. And now the price is trading above 2850 handle.
As I write this I’m reminded what my late friend P.Q. Wall might say; “Wyckoff, price is going so high it looks like it will go back in time if it keeps going higher”. Then the market can remain irrational long before your trading account can remain solvent.
If you want to learn more how Wyckoff plays out in the S&P 500 Emini futures market subscribe to my YouTube Channel.
We had a great week, but frankly, I can’t celebrate with 22 million people unemployed and Grandma not being able to see her grandkids in the nursing home. I’m taking care of my mom. She’s in the next room. Watching TV. With a smile on her face.
Those moments are priceless!
All the best to you and your trading,
Economic Calendar
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MiM
Watch that move into the 3:50 pm ET number. The market slowly drifted down between 3:30 and 3:50 making a prediction of an upside surprise and making that surprise even more valuable. We locked in a 1.5B MOC and the market resumed its upward climb from where it stopped at 3:33 pm .
Questions? Please email me: Marlin@mrtopstep.com
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Chart of the Day
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2806.25 | Opening Print: 2788.75 |
| Low: 2746.00 | High 2792.50 |
| Volume: 405,000 | Low: 2754.75 |
| ES Settlement: 2787.00 | |
| Total Volume: 1.8M |
S&P 500 Futures: AMZN Approaches $2,500 A Share
It’s hard for the markets to go down when tech giant Amazon is ‘exploding’ higher. From last Thursday’s $2,021.24 low to yesterday’s $2,460.84 high the stock has rallied $439.60 in 5 sessions and ended Thursday’s session up $78.68 or 3.14% and up 29.23 YTD. PitBull has always said that no matter what anyone says the US is the number one country in the world when it comes to technology.
The ES traded up to 2788.75 on yesterday’s 8:30 CT futures open, rallied up to an early high of 2795.00 and then sold off down to 2754.75 at 9:13 CT. After the low, the ES rallied all the way back to 2797.75 at 10:54 and sold off back down to 2755.00. The ES then rallied back up to 2787.00 at 1:38.
At 2:00 CT the ES traded 2779.00, traded 2783.00 at 2:30 and traded 2787.50 as the 2:50 cash imbalance MiM showed $1.5 billion to buy. On the 3:00 cash close, the #ES traded 2788.75 and settled at 2787.00, up 18.25 handles or +0.66% on the day.
In terms of the day’s overall tone, the ES was firm but the NASDAQ was the market leader. In terms of the day’s overall trade, total volume was better but still on the low side at 1.8million contracts traded minus 410,000 from Globex making total day volume 1.39 million contracts traded on the day session.
Our View
Ugly Rally Continues
The S&P has rallied 620 handles off its 2177 low to last night’s high of 2885.00. It’s been a relentless push that seems to be taking no prisoners. As you know I mentioned 2950 last week and again this week and I think we are on our way there. After the close, Trump announced his ‘Opening Up America Again’ guidelines, forming a bipartisan council with dozens of lawmakers. A Chicago company called Gilead Science’s antiviral medicine remdesivir is making positive headway against COVID-19. The University of Chicago Medicine recruited 125 people with Covid-19 into Gilead’s two Phase 3 clinical trials. Of those people, 113 had severe disease. All the patients had been treated with daily infusions of remdesivir. Kathleen Mullane, the University of Chicago infectious disease specialist overseeing the remdesivir studies for the hospital said “The best news is that most of our patients have already been discharged, which is great. We’ve only had two patients perish,” I have felt strongly that something positive will happen when it comes to medications or a vaccine. I know they say 18 months but I think it’s going to be sooner. Like in the next six months. Piles of cash being spent and some of the brightest scientists in the world are working on it. We just have to hang tight.
Our view, today is the April options expiration. No one even thought about the SPY 2900 opening interest coming into play on yesterday’s close but when the ES rallied 98 handles after Globex opened, those calls and others just above ‘came into play’. The other part of this is there are some ‘huge’ hedges that have not been covered but if I am right the short call sellers will have to cover, roll higher, or buy futures. All the above is bullish. Our lean is just the overall price action which is open higher, sell-off, watch for some back and fill, then start to rally going into 10:00 or 10:30 CT. If the ES is good we should see 2900 or higher. I guess that means buy the pullbacks but I can’t rule out selling a few rips either.
Danny Riley is a 39-year veteran of the CME trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.
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