Market Review
Polaris Trading Group – Taylor 3-Day Cycle
Prior Session was a Cycle Day 1 (CD1) Normal was for a decline that unfolded and reached a lower projected level during GLOBEX with 100% short inventory. The expected response was for a counter-auction to relieve the bearish condition. Open Range was bullish out of the gate as this Cycle’s Rally began to unfold, auctioning price higher filling Friday’s gap. Buyers “dried-up” near highs as sellers pushed price lower during afternoon session settling at 5-day Point of Control.
Today is a Cycle Day 2 (CD2) Normal is for “back n fill” price action as Value is forming a 3-day consolidation range. Key Line -in-Sand (LIS) is marked at 3317 for bulls to defend. Should sellers take control, a retest of CD1 Low (3307.25) would be anticipated. Bears will need to defend 3-day Value High 3326. Overall bullish trend remains intact, albeit with some early cracks beginning to show through.
IF Prior High (3329.75) is cleared, THEN CD2 Upper Penetration Target Zone measures 3339 – 3341. IF 3317 (LIS) is violated and converted to lower resistance, THEN deeper downside targets CD1 Low (3307.25), followed by 3303 CD2 Violation Level.
Cycle Day 2 Target Levels Spreadsheet
Thank you for viewing PTG 3 Day Cycle.
PTGDavid
Closing Prices
In the Tradechat Rooms
The MiM
Big numbers both sides of the imbalance with 1.5B imbalance on the buy-side and also 1.5B on the sell-side. Then at 3:15 pm, ET netted out to just 44 M total imbalance. Starting at 3:20 we began sliding negative on the MiM and the more we grew the more the market sold off. That 3:45 pm bar was a tell that we were going to get a surprise on the 3:50 pm reveal as the sell orders were being held back to the last possible moment. At the 3:50 reveal it was a 1.6B sell imbalance. That was decent.
So far in January, we have had 13 trading days. Here are the reveal stats:
Net is 7.7B$ buy. New money coming into the markets, but, warning, we have had a couple of decent sells over the last 5 trading days.
HFT Alert
Economic Calendar
Globex
| GLOBEX Session | Day Session |
| High: 3326.00 | Opening Print: 3317.00 |
| Low: 3307.00 | High: 3329.75 |
| Volume: 181,000 | Low: 3316.00 |
| ES Settlement: 3319.50 | |
| Total Volume: 1.48M |
After dropping down to 3307.25 on Globex Tuesday night after the China ‘virus’ headlines the ES bounced before yesterday’s 8:30 open. The ES traded 3316.50 on the 8:30 CT futures, traded 3316.00 then traded up to 3323.50. After the high, the ES pulled back to the 3319 area and fell into an early ‘back and fill ‘ pattern and around 11:45 traded up to a new daily high at 3329.75. After the high, the ES sold off down to 3318.00 as news hit that the United States had confirmed its first case of the coronavirus in Everett, Washington, and Boeing (BA) sold off after the company confirmed it now sees getting regulatory clearance for the 737 Max’s return well into the summer. All this while the Trump impeachment trial in front of the U.S. Senate was debating how to proceed. After the low, the ES rallied 7 handles up to the 3326.00 level at 2:12 CT.
The ES traded 3324.00 at 2:30 as the MiM showed $122 million to sell, traded 3319.00 on the 2:50 cash imbalance as the final MIM showed $1.6 billion to sell, traded 3321.50 on the 3:00 cash close and settled at 3319.50 on the 3:15 futures close, down 5.75 handle or 0.17% on the day.
In terms of the ES’s overall tone, I have to say it was nothing short of amazing. There were multiple reasons for the ES to sell off and keep going down but it shook off everything from the impeachment hearings to the Boeing news to the first reported case of coronavirus in the United States. In terms of the day’s overall trade, volume was high with 1.46 million ES futures traded.
Chart of the Day
The first 15 days of the year have seen the largest ever inflow into bond funds in any 2-week period in the last 15 years.
Top Stories on MTS Overnight:
- The ECM Turning Point – Marty Armstrong
- Netflix expands its NM profile
- Cases of new viral respiratory illness rise sharply in China
- Iranian MP Announces $3 Million Bounty For President Trump’s Head
- Saudi Prince Reportedly Involved In Hacking Of Jeff Bezos Phone
Our View
Trump Impeachment Trial, Coronavirus In US, Boeing Drops, FAA Pushes MAX Return Date To June Or July
Above is a map of the China coronavirus spread. MrTopStep China has been providing up to date news as the total number of confirmed cases has jumped to more than 300 people and prompted authorities across Asia to step up control measures. Late yesterday the World Health Organization convened an emergency meeting on the Wuhan Coronavirus with the World Health Organization (WHO) committee to advise the Director-General whether the outbreak constitutes a Public Health Emergency of International Concern (PHEIC) and recommendations to manage it. A friend that runs MrTopStep China had this said he and his wife flew to Zhengzhou from Hangzhou two days ago. Hangzhou confirmed 5 infected yesterday and some of whom had been to Wuhan days ago. Zhengzhou is close to his wife’s family. The couple was supposed to see her parents but they were told to fly directly back to their home for the Lunar Spring Festival in North East of China-Heilongjiang Province. One case was found in Zhengzhou after they left for home and just an hour ago one suspected case was found in Mudanjiang, Heilongjiang Province…quite distant from his home city Hangzhou. He said it looks scary and that they are wearing masks all the time wherever they go but the face masks were already out of stock in pharmacies. He told me that the virus came out from Wuhan. He said the virus was supposedly transmitted from wild animals to humans. It was originally found in a seafood market in Wuhan. That one store illegally sold wildlife animals as food to people…The first case was reported in Dec. 2019. But that didn’t receive too much attention in the media. All the people were enjoying the coming of the new year and suddenly the disease broke out this week.
As we all know, the Chinese government has a history of under-reporting negative events and my feeling is that the number of cases is much higher than what’s being reported. I don’t think that the fact that it has already spread to other Asian countries and the first case in the US was reported already are very good signs. According to Commerce Department data as of May 31, 2019, about 3 million Chinese traveled from China to the U.S. last year.
Our view: I know the trend is your friend but I think the spread of the coronavirus is a lot worse than the Chinese are reporting. I also think that the ES is at or near a top. Our lean is to sell the rallies. That doesn’t mean we won’t buy into a quick drop for a scalp but we think the next 30 to 50 handles are lower.
Market Vitals Technical Analysis
As always, please use protective buy and sell stops when trading futures and options.
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