Market Review
Day trade Emini futures using the Richard Demille Wyckoff Method and WB Internal Clock can give you the edge you’ve been looking for. The first level the bulls should have their eyes on is the limit down on Mar-16 at 2555.50 handle. It checked the rally started on the limit down on the Mar-28 marker.
The preliminary supply came in on Mar-24 at 2470 handle. One would hope that 2386 holds if the bulls have more reason to complete the second test which may come Thursday or Friday. It appears all eyes are on the weekly jobless claims report, expected an record-setting rise of 1.5 million claims, or more. The first one to more fully reflect a U.S. economy crippled by the coronavirus outbreak. Currently, price is bouncing off the low of 2402 around the 8:32 EST marker.
That’s what I gave my clients yesterday (Mar-26) and boy howdy did it rip!
Currently, the market is trading 2568 handle That’s 166 points from 2402 low just before the Jobless claims… it’s been checked at the 160’ish daily range for a few weeks. Perhaps it’s due to the Algos running the pits but mums the word.
Our thoughts and prayers go out to anyone who may be affected/infected by the devastating virus that is spreading. Last check, 533,015 infected with at least 24,095 deaths. That’s up 286,253 infections and 14,033 deaths from last Friday
I pulled up last Friday’s report https://mrtopstep.com/premium-op-30-day-lockdown-2/ and wow. I was God Smacked! WB clock also gave us the lean. It was an S2L day. This day is the Kewpie day. High probability for the last hour to be the high of the day. I’d say it was a good strong buying pressure trend day.
Here’s a recap of this week: https://soundcloud.com/wyckoffamtrader/sets/week-thirteen-year-2020-march
LOOKING FORWARD — FRIDAY, March 27, 2020
This day is an S3L day. WB would say a Gravy in the Gap. We had a hard drive up yesterday. There is still room to pull back to say 2513 or so. That is if you are looking for the support trend line to be tested. The next level could be up to 2691 with the first test of the overbought line at 2650 handle. Give or take 10 handles or more.
I’ve been tracking the virus since the end of December 2019. My curiosity was why were all those folks wearing masks. It didn’t hit public awareness until 100,000 folks were infected. Now, at 533,000 plus, the market has ripped up 200 points in a day?
The question on every trader’s mind is when does Big Old Daddy Bull pull the ripcord and start taking profits? Will today gap and go or gap and crap? Currently, Globex is pulling off the highs of 2634 handle. The move up to 2577 appears to be respecting the supply trend line.
Currently, we are in a trading range from 2535 up to 2634, a 100 point range. It’s either a potential resting spell for further upside progress or a potential distribution area. My notion is a resting area.
As you can see this is issue number 637. I’ve written 637 issues and have given our faithful subscribers over 4,344 points to date with 628 trades since August 8, 2018. Just this week our subscribers have been very lucky with the levels given: no levels given due to curbs Monday, no levels given due to curbs Tuesday, 43 points Wednesday, 23 points Thursday. Total for the week 66 points, that would be $3,300 on 1 lot and $9,900 on 3 lots.
I’ll be the first to say, it does NOT happen every week. When it does it’s a beautiful thing! I would love for you to join us.
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MiM
Our “reveal only” MiM has certainly set up some nice trades now that everyone is blind going into the 3:50 pm. Out of the chute was a $6B buy and up we went from the down move into the 3:50 candle. Even after that high-speed updraft there were another 20 points to gain. The paring wasn’t quite as resolved going into the 4:00 close indicating that holders are not willing to part even after a three-day rally.
Get the skinny when we get it. Join the MiM.
Chart of the Day
USA Cases (Blue) Vs. Deaths (Red). This chart is from Wiki: https://en.wikipedia.org/wiki/2020_coronavirus_pandemic_in_the_United_States
Wiki has some great data for us data heads, this log scale chart (the only way you should look at this kind of data) shows the exponential growth of both cases and death. The 15 day relationship between the lines is worth watching as is the correlation. As we begin to “flatten” the curve the slope of the blue line should become less and we should see that red line react 15 days later. Worth watching. We will try and share it each week.
Top Stories on MTS Overnight:
- Chloroquine (a malaria drug) maybe: An Effective…
- Joe Biden’s inner circle: No longer a boys club
- Senate passes $2 trillion coronavirus relief bill,…
- Thursday: Initial Unemployment Claims, Q4 GDP
- Coronavirus (COVID-19) Update: Daily Roundup, March 25, 2020
- Dow, S&P Have First Back-to-Back Gains in Over a Month
Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2497.50 | Opening Print: 2493.00 |
| Low: 2393.50 | High 2625.75 |
| Volume: 719,000 | Low: 2487.25 |
| ES Settlement: 2608.75 | |
| Total Volume: 2.3 M |
S&P 500 Futures: #ES Up 20% From Record Down, MOC Buy $6 Billion
The ES traded 2493.00 on Thursday morning’s 8:30 CT futures open, pulled back down to the early low at 2487.25 and with the exception of a few small pullbacks traded up all day.
At 2:00, the ES traded 2583.50, traded 2585.00 at 2:30 and traded 2588.00 at 2:50 as the final cash imbalance showed $6.6 billion to buy and traded up to 2625.75 at 2:55. On the 3:00 cash close, the ES traded 2610 and settled at 2608.75 on the 3:15 futures close, up 141.50 handles or 6.24% on the day.
In terms of overall tone, it was almost overly bullish. In terms of the day’s overall trade, total volume was the LOWEST in weeks at 2.33 million with 719,000 coming from Globex making total day volume 1.61 million contracts traded on the day session.
Our View
Record $850 Billion End Of 1st Quarter Rebalance
I don’t think I was the only one that had this wrong yesterday. After selling off late Wednesday and down to 3393.50 the ES rallied after the jobless claims number and never looked back. It didn’t take me long to figure out that my view was wrong, dead wrong! After falling over 31% from it’s all-time February 19th 3397 high the ES rallied 21.50% in the last three sessions, the largest three-day rally since 1931.
According to JPMorgan, when volatility jumps, investors exceed their limits, forcing them to cut positions rapidly in a falling market. JP Morgan calculated that last week’s VaR shock was the biggest since Lehman Brothers collapsed in September 2008. JPM want on to say that estimates, balanced or 60:40 mutual funds, a $1.5tr universe in the US and $4.5tr universe globally, need to buy around $300 billion of equities to fully rebalance to 60% equity allocation. JPM admits that the timing of these rebalancing flows is uncertain but it is likely to take place over the coming days and ahead of March 31. As JPMorgan concludes, “$850 billion of pending rebalancing flows is done over the next few weeks that should also help to reduce vol and to lift equity prices higher from here.”
I have been around hundreds of rebalances during my career at my S&P 500 desk on the CME floor. I remember some ‘very large’ rebalances after the fed initiated its quantitative easing programs during the credit crisis but none even near what JPMorgan is talking about. I do know when there are large rebalances that they generally spread out over a few days but not over a full week. So, let’s say the rebalance is 50% of what’s being talked about. Just the sheer number with the S&P down so much would cause a massive short-covering rally and when you look at the last three days the only thing I can think of is part of what is being advertised is real. A few days ago when @therealTraderDave showed me the rebalance numbers I told him it wasn’t real but I can’t say that now.
Our view, this boat has sailed. The one thing that really bothers me is how big yesterday’s rally was and how extremely low the volume was. When you take out the overnight Globex volume, only 1.6 million S&P futures traded. Just two weeks ago the volume was tracking 3.5 million to over 5 million a day. Clearly the higher the S&P goes the lower the volume. Additionally, 30% of yesterday’s total NYSE volume was done on the close. I think I have had a good feeling for the markets overall but I fell off my horse yesterday and need to get back in the groove before posting my feel.
Market Vitals Technical Analysis
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