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Market Review

NJ – Discovery Trading Group

As discussed last week, the ESM20 2965 area was key resistance and “good chance the bulls try to take the ESM20 higher and at least probe 2965 which continues to align with the 50-day moving average.”  The bulls were able to muster a small probe last week, but the resistance area held firm.  During Globex on Sunday, the bulls tried to move the ESM20 beyond the resistance again, but it’s too early to declare the resistance cleared until Tuesday’s price action unfolds. 

Over the course of last week, volatility decreased as the ESM20 moved sideways under the 2965 resistance.  The 200-day moving average has turned up for the first time since the beginning of March.  The 200-day moving average is not a leading indicator by any means but may provide some support when the ESM20 sells off again in the future. 

Given the little relative price movement last week, the scenarios for this week have not changed much from last week:

1.       If the 2975 resistance can be cleared, the 3090s significant resistance should be reached. 

2.       If the ESM20 can clear the 3090s, it should move to the 3175 area.

3.       If the 2975 resistance holds or price starts heading down from Monday’s close, price could spend another week between 2760 and 2975.

4.       If the 2760s are cleared, the bears may get aggressive and we will see a significant move down, possibly below 2500.

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


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MiM

Using our new version of the MiM from last Friday and looking at the 3:07 pm (15:07) candle we see a decent volume spike and a down move.  Our MiM was displaying a decent 400M sell at that time and some sold out for the 3-day weekend on that initial data.  As the MiM grew slightly more negative we continued to sell down 10 points with a battle at 15:22 and back up we climbed.  The 15:50 locked MOC was about 250M to buy, a complete 180 from the early indications, which has been the game since the virtual floor reopened.   Today the full floor opens, we have not heard if data will start at 14:00 again or not. I will let our members in the room know what I hear today.

Questions?  Please email me: Marlin@mrtopstep.com

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


Chart of the Day


Top Stories on MTS Overnight:


Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 2952.50Opening Print: 2957.50
Low: 2903.75High 2954.00
Volume: 290,000Low: 2928.25

ES Settlement: 2952.00

Total Volume: 1.34M

S&P 500 Futures: Stocks Rally As The US Opening Up Its Economy

The ES traded 2936.75 on Friday’s 8:30 CT futures open, traded up to an early high of 2944.50, sold off to an early low of 2928.25 at 10:15 CT, rallied up to 2944.50 at 11:42, pulled back and traded 2949.75 at 1:10. After pulling back down to 2938.75 at 2:23 the ES traded back up to 2948.50 as the 2:50 cash imbalance showed over $500 million for sale. On the 3:00 cash close, the ES traded 2951.50 and settled at 2952.90 on the 3:15 futures close, up 16 handles on the day.

In terms of the S&Ps overall tone, it was extremely firm but still, it’s down 8.52% YTD while the Nasdaq composite is almost 4% on the year. In terms of the day’s overall trade, volume was very low. A total of 1.34 million ES futures traded with 285,000 coming from Globex making total day volume at 1.06  million futures traded on the day session.

Our View

Clearwater beach is nearly at capacity during Memorial Day weekend as law enforcement limits crowds to provide for proper social distancing Saturday. 

The Trend Is Your Friend; #ES 2990 

It’s almost like the stock market and people have forgotten that there are over 1.66 million cases of COVID19 and almost 100,000 deaths in the U.S. While I understand people are happy to get to go out of their homes, hit the beaches and some of their favorite restaurants, it’s almost like people have forgotten there is a pandemic going on. I am not going to bore you with all the talk about overcrowding. Why? Because it’s apparent no one cares. Most beaches in Pinellas County, Florida had reached capacity by mid-afternoon Saturday, the start of Memorial Day weekend, forcing law enforcement to turn away some beachgoers who got a later start. About 20 public beach access points were closed before 11 a.m. Just after lunchtime, the Sheriff’s Office announced that the county was reaching an “unprecedented level of closures” as about 300 law enforcement officers patrolled the sands from St. Petersburg to Tarpon Springs. I don’t think I have to tell you what’s going to happen but will come back to this in two or three weeks.

I am not sure what to say other than happy days are here again! The government handing out money to firms worth billions and the little guys going out of business so fast they can’t get the truck up to the door fast enough. It’s a sad sight but one we should get used to seeing. Our view, if the ES is at or near the Globex high (up 25 or 30) on the open my lean is to sell the open or the first rally above and look to buy the midmorning pullback. As I have said; I am a big advocate of not trading in the midday ‘chop’ and come back and play the MiM on the close. 

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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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 (3588 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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