Premium OP: Are Happy Days Here Again?

on May 20, 2020

Market Review

Polaris Trading Group: Taylor 3 Day Cycle Commentary Author: David D Dube (PTGDavid)

Tuesday’s Session was Cycle Day 1 (CD1): Normal Session unfolded as price found early support from 2938 CD1 Average Decline Level, followed by a rally fulfilling 2875 CD1 Penetration Level. Late afternoon a news headline sent price declining, closing price (2917) within 3 pts of session low (2814.25)

…Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): Having closed near the low of the session we then have two scenarios to consider:

1.) Price continues lower targeting 2900 CD2 Violation Level. Failure to hold this level opens the trap door to the lower 2885 – 2880 zone.

2.) Price finds a supportive bid, preferably above CD1 Low (2914.25) securing; then rally, targeting 2935 – 2940 CD2 Average Cycle Range.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet >> Cycle Day 2

Thanks for reading,

PTGDavid
Polaris Trading Group

Economic Calendar

Closing Prices

In the Tradechat Room

MiM

Crazy close. The Moderna headline crash at 2:50 pm ET set the direction for the reset of the day with just a respite of hope flashing up on the MiM. Our 3:10 candle attempted to move the market momentum but instead found a pocket of sellers that moved the market lower into the close, and it all came with marked increase in volume. At the 3:50 reveal it turned out that the MOC was actually quite flat and there was no there there and down we rode in the last five minutes.

Questions? Please email me: Marlin@mrtopstep.com

Get the skinny when we get it: Join the MiM.

Chart of the Day

Globex

(ESH20:CME) GLOBEX Session	(ESH20:CME) Day Session
High 2976.25	Opening Print: 2939.75
Low: 2830.75	High 2958.50 (Lower High)
Volume: 380,000	Low: 2915.50 (Late)
	ES Settlement: 2918.00 Down 26 Handles or -0.90%
	Total Volume: 1.53M

S&P 500 Futures: Mnuchin And Powell Testify Before Senate; Take More Risk In Lending Programs

The ES traded 2939.75 on yesterday’s 8:30 CT futures open, rallied up to 2943.25 and then sold back off down to 2931.75 at 8:48 am. After the low, the ES rallied up to the early high of 2955.25 at 9:13, pulled back down to to the 2932 area, rallied back up to 2955.00 at 9:15, pulled back down to 2938.25 and at 10:32 made a new high at 2956.50. After pulling back to the 2943.50 area the ES rallied up to a new high of 2956.75 just before 1:30. At 2:00 CT the ES traded 2933.25, traded 2939.50 at 2:30 and traded 2925.00 at 2:50 as the MIM went from $800 million to buy to FLAT.

In terms of the ES’s overall tone, the futures got a boost from the early morning comments by Treasury Secretary Mnuchin and Freder Reserve chairman Powell. But lacks any real late-day buying. In terms of the day’s overall trade, 1.53 million ES traded with 380,00 coming from Globex making total day volume somewhat LOW at 1.15 million futures traded on the day session.

Our View

Happy Days Are Here Again…

I would say things are starting to get back to normal but that’s not entirely true. The US stock market has been totally pumped up by all the government aid and Federal Reserve quantitative easing programs. Yesterday the Fed basically said it was willing to take on more risk and Treasury Secretary Steven Mnuchin said during his testimony ‘We are fully prepared to take losses in certain scenarios’. This pushed the ES all the way up to 2976.25 on Globex and a lower day session high at 2958.50 which was followed by a late-day headline from statnews.com that vaccine experts say Moderna didn’t produce data critical to assessing the Covid-19 vaccine. The ES sold off 50 handles from its high down to 2908.50 just after Globex opened.

Our view, there are a couple of scenarios: the first scenario is the ES made a low at 2760.25 at the end of last week and if I am right we could see 2780 by the end of this week. I see today, Thursday and Friday down, if I am right we could potentially erase all of Monday’s gains. Scenario two is we open lower today and go higher. Remember, the markets have already rallied as the US opens up the economy.

If DAX gets under 108 it could drop quickie down to 104.

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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_{Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.}

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by Danny Riley