Polaris Trading Group: Taylor 3 Day Cycle Commentary Author: David D Dube (PTGDavid)
To place the 3 Day Cycle into proper context, it’s important to discuss the “cycle transition” from day-to-day. That is, we cannot assess each cycle day independently without referencing the adjacent cycle days.
PTG Briefing Note to Subscribers stated: “Prior Session (Monday) was Cycle Day 3 (CD3)…Price fulfilled Positive 3 Day Cycle Statistics early in the session following FED’s announcement, but quickly faded, retesting session lows. Firm bid into the closing rotation set the tone for a continuation rally as we previewed this Scenario with PTG’s Live Trading Room Community.”
From our Trading Room (Monday Night): >>PTGDavid:(10:00:39 PM): @ES Looking good during Asian Session…Bullish Bids abound…Price holding and rallying from Prior VAH>>>One of the bullish scenarios we covered prepping for Cycle Day 1
…Transition from Cycle Day 3 to Cycle Day 1
Tuesday’s Session was Cycle Day 1 : Normal for CD1 is some magnitude decline. Strong bids squelched any decline as price rallied to “limit-up” and into the 3 Day Central Pivot Zone between 2300 – 2342. Bulls will need to convert this zone to support in order to continue the current rally. Further upside target 2360…2386…2400 Roundie.
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into today’s Cycle Day 2…Price gapped higher in the prior session and never looked back, continuing the rally which actually began during Cycle Day 3 “limit-down” to 2173.75. Price has fulfilled CD2 Upper Penetration target of 2460.65 as well as clearing the all-important 3 Day Central Pivot Zone. Bulls will need to hold any back-test of this zone should selling materialize. Further upside hurdles remain, but if this is the beginning of the “repair-process” and not simply a “dead-cat” bounce, then Bulls will need to prove their metal.
Thanks for reading,
In the Tradechat Room
As a reminder, we are on the Mini MIM now with data only available from 3:50 pm ET until the close. Our 3:50 reveal was a nice 1.5B which grew going into the 3:55 reveal time frame. It was a nice finish to a nice day as prices had come down into the 3:50 time and rallied on the closing auction a nice 30 point move.
We have made considerable improvements in our speed to access MiM data which has helped up maintain a traders’s edge going into the final 15.
Get the skinny when we get it. Join the MiM.
Finally, some real strong programs firing. That indicates breadth buying rather than targeted buys. At 2:53 pm ET we detected a capper using 360 symbols and during the close another at 3:54. Overall there wasn’t too much activity with 94 overall programs, 42 Buy and 52 Sells.
Chart of the Day
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|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 2333.50 LIMIT UP||Opening Print: 2346.75|
|Low: 2207.50||High 2439.75 LATE|
|Volume: 480,000||Low: 2334.00 EARLY|
|ES Settlement: 2435.00 +217.75 Handles or +9.82%|
|Total Volume: 1.92 M|
S&P 500 Futures: 10 Limits Ups or Downs in Last 6 Sessions
The S&P futures have always had their share of big ups and downs but nothing like we have seen over the last six weeks. As of yesterday the S&P has been limit up or limit down 10 times in the last 6 sessions.
During Monday night’s Globex session the ES made a low at 2207.50 and rallied all the way up to 2333.50, limit up. On yesterday’s 8:30 CT futures open the ES traded 2346.75, sold off down to 2334.00 at 8:44 and traded 2386.50 going into 9:30 AM. After the high, the ES pulled back down to 2360.50 at 10:07 and then the ES got hit by a big buy program that pushed the future all the way up to 2427.25 at 11:40. After the high, the ES made 6 lower lows down to the 2376 area, rallied back up to the 2400.00 area and then pulled back to the 2348 area just after 1:00 and then rallied up to 2390.00 going into 2:00.
At 2:00 the ES traded 2403.00, traded 2412 at 2:30 and traded 2412.50 at 2:50 as the final cash imbalance showed $2 billion to buy. On the 3:00 cash close, the ES traded 2430.00 and settled at 2435.00 on the 3:15 futures close, up 217.75 handles or +9.82% on the day.
In terms of overall tone, the ES actually acted very firm. In terms of the day’s overall trade, total volume was 2.4 million with 480,00 coming from Globex making total day volume ONLY 1.92 million contracts traded on the day session.
#ES Up 10%
In all honesty, when I said I was looking for a 10% rally in the #ES yesterday I didn’t think it would happen all in one day. That said, everything is about extreme moves and yesterday was another day of that. I am going to keep this simple; the fed or the PPT stepped in on Monday and despite not getting the bailout package yet the markets are basking in the new liquidity. Is the downside over? I don’t think so but when the ES corrects 30% from a high you generally see some type of reversal. The ES rallied 10% to 20% in 1987 and 2008 and then retested the lows.
Our view, I know this may sound crazy but I think it’s possible the ES rallies to 2500 to 2550. After that, I say sell it with both hands. Our lean is for buying the pullbacks and looking for higher prices.
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