Market Review
Last week in the MTS Opening Print, I wrote “the key will [for a bearish move to the downside] be the 3105s, the bottom of last week’s consolidation area.” The ESU20 never reached 3105, instead bouncing off 3119 on Tuesday to struggle under to move through the 3226s. As I also wrote last week “to the upside, Monday’s 3226s high is the key area of resistance for the bulls to clear. If the 3226s can be cleared, then the next stop is the February all-time highs around the 3350s.” The bulls were finally able to send the ESU20 through the key 3226s on Monday. Each trading day, DTG publishes a projected high and low for the day’s trading. Monday’s projected high was 3249.25. The bulls were able to move 3 ticks beyond, but Monday’s bullish move was what was projected and not a volatility expanding trend day.
So, what now? The next major stop for the bulls is the back-adjusted, pre-coronavirus, Feb 20 all-time high of 3345.75. I suspect it may take a while for the ESU20 to probe and clear the 3346s and there is a chance price will fall short for a much-needed pullback. There is structural resistance at 3260s, 3276s. and 3317s the ESU20 will need to work through.
Expect the 3226s to become support. If the support holds, the bulls should continue to grind higher while volatility is likely to contract. Below 3226s, the range 3105 – 3119 is the next significant support area.
Volatility continues to contract as the bulls move higher, a consistent trend we have witnessed over the last several years. Increases in volatility become associated with quick price moves to the downside.
Below is a snap of the ESM20 daily chart with the above support and resistance numbers marked for reference. Thanks again for reading. For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com
Economic Calendar
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In the Tradechat Room
MiM
Sneaky MIM wtih a 500M sell showing but the signal was in the #% number with no conviction on direction flashing to a buy side. In the end it was 825M to buy that spiked a high on the 15:50 bar and stated a sell into the close. There was large scale selling on the 15:55 candle for those seeking to exit.
Questions? Please email me: Marlin@mrtopstep.com
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Covid-19
We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quickly as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).
The light at the beginning of the tunnel. The charts below show the rising daily death counts in the three most prominent states. Today we will look at the front end of the pipeline with new cases from the same three states. Before we see a fall in death counts we will need to see a fall in new cases. That is the light at the beginning of the tunnel so we can eventually see it at the end.
We continue to focus on our top 3, Florida (20M pop), Texas (30M), and California (40M), looking at daily deaths, but more importantly, changes in the count.
California had shown a drop in new deaths that heading into the weekend was quite encouraging. That drop has turned into a flattening which is still better than what we are seeing in Florida and Texas which at this time show no abatement but the continued growth of about 45% week over week. If that rate continues flat we should see some 200+ numbers for Florida this week. That will be a headline number. (Florida numbers hit the wires around 10:30 am ET each day).
For all three states, today’s over/under should help us discern any trend change. We want the line at least flattened and for that to happen the numbers have to come in as below:
Over / Under
These are the over/under numbers for 7/20/2020. In order to push the 7-day average lower, today’s reported numbers need to be lower than the target number. A new case or death number that is higher will increase the 7-day average.
Yesterday’s over/under numbers and actual are also in the table.
| Yesterday | Yesterday | Today | Today | |
| State | Cases | Deaths | Cases | Deaths |
| Florida | 12,624 / 10,347 | 35 / 92 | 9,194 / 9,440 | 133 / 134 |
| Texas | 5,655/7,404 | 43 / 62 | 10,745 | 87 |
| California | 8,358 / 6,846 | 23 / 9 | 7.346 | 47 |
| New York | 557 / 519 | 10 / 8 | 912 / 698 | 5 / 1 |
Use today’s number to watch the releases to determine the trend.
To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.
Wear your mask!
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3222.00 | Opening Print: 3213.75 |
| Low: 3190.25 | High 3250.50 |
| Volume: 300K | Low: 3205.25 |
| ES Settlement 3246.25 up 32.5 handles or +1.01% | |
| Total Volume 1.06 Million |
S&P 500 Recap 7/20/20
Early Dip Then Big Rip
The ES traded 3213.75 on yesterday’s 8:30 futures open. After the open, the ES printed up to 3221.00 at 9:33 and then reversed down to the daily low of 3205.25 at 8:37. After the low, the ES popped back up to the 3215.50 area, sold off down to a higher low of 3206.00 and then back and filled until just after 9:00 and then shot up to 3229.50 at 9:42. After the high, the ES pulled back down to 3222.75, rallied a bit, made two higher lows then traded up to a new high of 3237.75. The ES pulled back down to 3234.25 then rallied up to another new high of 3239.25 at 2:02 and then up to 3243.00 at 2:24 .
The ES traded 3244.50 at 2:30 and traded 3247.00 as the 2:50 cash imbalance showed $800 million to buy. On the 3:00 cash close, the ES traded 3244.00 and settled at 3246.25 on the 3:15 futures close, up 32.50 handles or 1.01% on the day.
In terms of the ES’s overall tone, the ES acted very firm. After the sell-off, the NQ went straight up. In terms of the day’s overall trade, volume was the lowest in several weeks, Globex volume was 300,000, total volume was 1.06 million making total day session volume only 760,000.
Our View
2000 Tech Bubble ‘Revised’
Our View:
For those of you that were ‘of age’ the months leading up to the 2000 tech bubble were very telling. New highs everyday and falling volume. 1999-2000 was the year of the stock day trading rooms where anyone that had zero knowledge of tech stocks could make millions. Traders and investors snapping up any tech names they could buy, most of these companies had zero capital. I have spoken about this in the past, all these college kids wearing shorts, sandals and puka beads getting on the elevator with the locals and order fillers from the CME floor. It was not a good mix but it was very memorable.
So let’s get to the point, Jeff Bezos from Amazon made $13 billion yesterday, TSLA’s market cap reached $300 billion since going public 10 years ago at $17.00. If you want to own tech stocks it’s easy, you just buy FAANG, that’s pretty much where all the money is being made. Let’s face it folks the S&P is no longer the king dog of the global markets. China has moved in and investors are finding more value in the technology. I didn’t see this story about Mark Cuban until just now but he’s right, ‘Everybody’s a genius in a bull market’ https://www.marketwatch.com/story/billionaire-mark-cuban-says-stock-market-tech-rally-very-similar-to-tech-bubble-my-19-year-old-niece-is-asking-me-what-stocks-she-should-buy-11595259535 I remember how the Nasdaq went up every day for months, day in and day out. I remember the days leading up to the technology crash and I remember how long it took to get back up to the old tech bubble highs. The old saying that the markets always go down faster than they go up was never so true as it was in 2000. I am not saying the Nasdaq or tech are going to crash but the economic fallout and shrink down from COVID19 has yet to be felt and when it starts, it’s going to happen fast.
Our view, if the ES gaps higher this morning my lean would be to sell the open or the first rally above the gap up and buy the midmorning pull backs. The ES is poised to trade above 3400 but I don’t think that will come without some drops & pops.
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.
Market Vitals Technical Analysis
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