Market Review
It doesn’t take any genius or rocket scientist (my uncle is one so I can talk) to see what the market did yesterday. Sure it was a gap. You had two options according to WB, Option one a Gap and GO. Option Two Gap and Crap…
Yeah right, I was saying that the 3110 level the day before was a big shelf of distribution. And what did they do over Globex? Take it up on little to absolutely no volume up to 3150 handle. Pull up a 60-minute chart on the DOW Futures and add the volume slide it over the 10:30 bar and what do you see?
High of day, greatly increased volume and a close on the absolute low of the 60-minute bar followed by the next bar almost the same distance down and a rally to the halfback of that bar.
That should tell you they are getting out. As long as people are forced to wear non-surgical masks required for surgical purposes (social distancing), give up their driver license when they enter a building (at the hospitals in Colorado), sit fingertips and pews apart at church (if you can even go) …this is not going to get any better.
In fact, it will probably get worse…
The Composite Man wants the price to stay in a positive area for as long as it can because the worst is yet to come. Think about the airline’s AAL and things about the cruise ships CCL; a lot of volume came out on the opening print. And they can’t sit long without making money. Who wants to fly or take a cruise?
Not to mention, on the groups yesterday, a lot of volume was seen on the opening print…and price did not look back!
As a trader, there is money to be made as long as you don’t marry the trade. The Algos can turn that 2 handle win into an 8 handle loss in milli-seconds. Be nimble, be quick, and don’t let the markets…make you sick!
Looking Forward Friday, July, 3, 2020
It’s a holiday-shortened U.S. trading week, as markets are closed today for the Independence Day holiday. Looking forward to Monday it’s possible they will play the same game they always play. We finished weak trading on the lows.
We put in a low of 3114 and settle came in at 3129 handle. That’s a normal bump. Pending upon the news and social unrest you may see a gap down Sunday and then rally up on Monday. That is if price is low enough for those in the know, i.e. Composite Man, the combined net forces of all the buying and selling to start lifting offers.
We had a good week but it was not as great as other weeks. I would love for you to join us. If you have not taken the time, now would be an ideal time to subscribe.
Chart of the Day
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U.S. stocks are poised to rise this quarter if history is any guide, according to Keith Lerner, chief market strategist at SunTrust Private Wealth Management. Lerner cited the S&P 500 Index’s track record after its biggest quarterly gains since 1950 in a report Tuesday. The gains ranged from 15% to 22%, in line with last quarter’s 20% increase, according to data compiled by Bloomberg. In each case, the S&P 500 rose in the following quarter. The average advance was 8.4%.
Our View
Civil Unrest & Independence Day
Independence Day (the Fourth of July or July 4) is a federal holiday in the United States commemorating the Declaration of Independence of the United States on July 4, 1776. The holiday is best known as a time for families to enjoy a day off from work, enjoy family reunions, cookouts, fireworks, going to the beach, picnics, baseball games, and ‘political speeches.’ But this year will not be like any 4th of July we have ever seen. Instead, it will be filled with political turmoil, civil unrest, street protests, calls for defunding police departments and the defacing of America. Despite the 4th of July falling on Saturday, the U.S. financial markets will be closed today. The CME Group and NYSE closed yesterday but will trade electronically until 12:15 CT today.
This year’s 4th of July holiday will carry a unique significance to the US economy that has been torn apart by the COVID19 pandemic that has claimed the lives of nearly a half a million people and infected 10.5 million people worldwide. The virus outbreak has provided a ‘backdrop’ for George Floyd who was killed at the hands of a Minneapolis police officer which caused civil unrest and violent protests that have destroyed scores of businesses across the US and the destruction of statues and historical figures. I have always felt the display of Confederate flags and statues were out of touch with society but tearing down George Washington? Or the destruction of Mt. Rushmore? I know throughout history new ideologies or new governments or revolts have taken down or destroyed statues but I have never seen it in the US. President Donald Trump and first lady Melania Trump head to Mount Rushmore National Memorial today to celebrate an early Fourth of July at a gathering of an estimated 7,500 people during a global pandemic and there will be no social distancing at the event despite the record-high new coronavirus cases in the United States.
My own view of this is that it’s going to get a lot worse before it gets better. And while it doesn’t sound like it right now, if President Trump was to get reelected it would only cause more turmoil and if he doesn’t the democrats start unwinding Trump’s economic agendas which I firmly believe will cause another big downturn in the stock market. There is no ‘win, win’ in any of this
Our view, I am short the ES from 3124 and will add if the ES rallies today. I can not see how the marches or all the shootings and deaths and the COVID19 case jumps can play out favorably for the stock market.
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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