Market Review
As suspected in last week’s MTS Opening Print, the ESU20 was unable to reach its Feb 20 all-time high before Thursday’s selloff back into the key 3226s which was probed and ultimately became Thursday’s VPOC (Volume Point of Control, i.e. the intraday price with the most volume) as price spent the afternoon rotating around the area. The 3226’s then became resistance again for Friday and Monday which the ESU 20 moved through late to close above.
The ESU20 remains in a solid uptrend channel and volatility continues to contract, especially to the upside. Last Thursday’s selloff is keeping volatility slightly elevated but for the most part, the ESU20 is waiting for reasons to move. Perhaps earnings from big tech (Apple, Amazon, Alphabet) this week, or coronavirus treatment or vaccine news, or China/US tensions, or maybe the Fed will surprise with their Wednesday announcement. US stock indexes have been resilient despite increasing coronavirus cases and hospital overloads. Many big companies included in the indexes have benefited greatly from the pandemic while many small businesses have been forced to close their doors and shuttle their employees.
From a technical support and resistance perspective, the 3190s have become a key support area. If the bears can clear, we could see an 80+ point drop relatively quickly as the 3105 – 3119 is the next significant support area. Above, last Thursday’s 3284.50 high becomes a significant resistance price area which if cleared, the ESU20 should retest the 3317s resistance area. Above there is the Feb 20 high but like last week, I think it will take a change in trader expectations from some “good news” for the ES to get to its all-time high this week.
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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MiM
Tiny summer MiM with just -400M to sell which had us sell off and then rally into the close. We should pick up toward the end of the week as we close the month of July.
Questions? Please email me: Marlin@mrtopstep.com
Get the skinny when we get it: Join the MiM.
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).
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.
Florida is starting to show the turn to the downside about a week after we detected a turn on Florida’s new cases. Today’s number to cement that turn in new deaths is 136. A number below will continue the downside move on our 7-day average.
They go big in Texas. After deciding that deaths were being consistently under-reported (we wouldn’t statistically disagree based on what we are looking at) they decided to add in a whole slew of deaths into yesterday’s number. That has the data all screwed up. Hopefully, the team at the COVID Tracking Project will work to repair it or else we must wait a week to move it through.
California still seems problematic as their small breakout above the 100 level has flattened. Today their new death count over/under is 61. That might be tough, we are still working through low weekend numbers for the state based on how they collect their data.
Over / Under
These are the over/under numbers for 7/28/2020. 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 | 10,374 /8892 | 92 / 77 | 9,440 | 136 |
| Texas | 7,404 / 7,641 | 62 / 675 | 9,305 | 131 |
| California | 6,846 / 6,891 | 9 / 29 | 9,180 | 61 |
| New York | 855 / 608 | 8 / 11 | 855 | 2 |
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.
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3223.50 | Opening Print: 3216.00 |
| Low: 3192.00 | High 3233.75 |
| Volume: 270K | Low: 3207.00 |
| ES Settlement 3232.50 up 29 handles or +0.91% on the day | |
| Total Volume 1.27 Million |
S&P 500 RECAP – Trade Date 7/27/2020
#ES Money Maker Chart
Up, Up and Away
The ES traded 3216.00 on Friday’s 8:30 futures open and then dropped down to 3207 at 8;33 CT. After the low, the ES started to short cover, hit buy stops and rallied 20 handles up to 3227.25 at 9:01. What’s significant about that and a clue to the day was that buy program into the half-hour. After 45 minutes of back and fill the ES traded down to 3223.25 and then rallied up to a new daily high of 3229.50 at 9:41.Soon after the high the NQ got hit by a tech sell program that pushed the ES 18 down to 3211.25 at 10:37. After the ‘flush’ the ES rallied back up to a lower high of 3228.50 at 1:45.after a small pull back down to 3212.00 the ES rallied up to a new high of the day, 3233.50, at 2:30 (another buy program into the half hour). The ES traded 3231.50 on the 2:50 cash close as the MIM showed $450 million to sell, traded 3231.00 on the 3:00 cash close and settled at 3232.50 on the 3:15 futures close, up 29 handles or up +0.91% on the day.
In terms of the ESs price action, it was the exact opposite of last week where every rally was sold to every dip being bought. In terms of the day’s overall trade, total volume was LOW at 1.27 million contracts traded.
Our View
SummerTime Blues
It’s the end of July and based on the ES volume yesterday it’s easy to see people are trading less. Part of it may be due to people taking time off but I think the real thing is that the markets are up too much and the risk is too great. While we think thin to win is good for the markets going up, PitBull says it’s a very bad sign. I am not going to do a big view today. It’s 9:30 PM CT and I have been up since 5am.
Our view, I told the PitBull that I thought the ES can go up to 3270-3280 and above that 3340. Will the ES see 3270 today? If I had a gun to my head I would say yes but there is a lot of headline risk out there right now. Our lean is to sell a 10 to 15 handle gap up, cover and look for a good spot to get long. That’s all I have to say about that!
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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As always, please use protective buy and sell stops when trading futures and options.
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