Market Review
David Zimmer – AMS Trading Group
The S&P futures (ESC20: CME) closed on Friday at 3327.71, eight points below its opening print of 3335.54, after closing Thursday at 3345.78. An almost twenty point trading range (3322.12 – 3341.42) gave traders a solid range to work with, the problem was too many thought the markets were going to bounce, they didn’t. Into one’s life, some rain must fall; the question is for how long the rain will fall and what the forecasts bring.
We’re short 3 at an average of 3350.50 and will increase on rallies. The tea leaves have changed; earnings aren’t supplying the upward motion they had in the past almost making this week’s releases moot. The Fed is still pumping money into the repo markets. I believe there’s a credit rating issue on some of the collateral being offered, similar to when Lehman Brothers went out years ago. If not, the decrease in interest rates means there are doubts about the economy continuing forward due in part to Coronavirus. Lower interest rates signal a weakening economy and worldwide epidemics are not very beneficial, just ask the airline carriers.
Better this week to follow the rest of what is on the table. That’s why I’m only posting one link with the monthly chart for NG. Patience works:
https://finviz.com/futures_charts.ashx?t=NG&p=m1
It’s a macro-world, folks. There’s more going on than I have time to write about so read, listen and more so, don’t react. Rather take the time to learn. There’s much more going on being long 6E, 6B, ZS & NG. Interested email me at david@amstradinggroup.com.
Economic Calendar
Closing Prices
In the Tradechat Rooms
The MiM
Breaking the trend for the week, the MIM concealed a buy for the reveal and closed out a boring hour and a half sideways trade into the close.
Chart of the Day
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 3350.00 | Opening Print: 3332.75 |
| Low: 3327.50 | High 3341.25 |
| Volume: 416,000 | Low: 3320.75 |
| ES Settlement: 3325.50 | |
| Total Volume: 1.6 M |
S&P 500 Futures:
The ES made a high on Globex Thursday night at 3350.00 and sold off down to 3327.50 after Friday’s job report came in higher than expected at 225,000. On the 8:30 CT futures open, the ES traded 3332.75, had a few upticks then sold off down to 3324.00. After the low, the ES popped 12 handles up to the 3336 area, pulled back down to the 3332 area, then rallied back up to a new daily high at 3341.25 and then back down to the 3336.75 level then back up to the 3339.25 level. After selling back off down to the 3334.00 level it went even lower, down to the 3329.50 level
At 2:30 the ES traded 3327, traded 3329 on the 2:50 cash imbalance as the final cash imbalance showed just shy of 1B to buy. On the 3:00 cash close, the ES traded 3326.75 and then traded 3326.00 on the 3:15 futures close, down 19.75 handles or 0.6% on the day
In terms of the day’s trade, a total of 1.6 million futures traded which is a bit lower than what we have been seeing.
Our view:
Despite a few big drops over the last few weeks, the ES rose nearly 3.2% last week. It was the best week for the S&P since early June. I know it’s hard to maintain a clear view of the S&P when it’s down 50 or 60 handles in one day but the overall patterns continue to favor buying the bad news / big sell-offs. With just over 60% of the companies having reported 4Q earnings, 22% of S&P companies have revised first-quarter profit targets higher, the highest percentage since Q2 2018 and third-highest since 2012. According to FactSet, profits will grow in the fourth quarter, with about two-thirds of the results already announced. That wasn’t the expectation just a few weeks back, when analyst estimates, on the whole, were calling for another quarter of net-income declines and thus a continuation of the earnings recession, which occurs when profit falls for two or more quarters in a row. This week, 66 companies in the S&P report earnings including Nvidia Corp. (NVDA), Cisco (CSCO), Advanced Micro Devices Inc (AMD) and Applied Materials (AMAT).
I still think we see lower prices today but if the ES gets down under 3306 to 3300.00 my lean may switch. Currently, I am short from 3344.50 but I am looking to cover and looking to get long. I am trading very hard to get away from the ‘scalping’ to trying to hold for longer time frames. It’s a big adjustment but I really believe its the correct path.
Market Vitals Technical Analysis
Did you know that your premium membership gives you access to our Market Vitals? Click on the image below and get today’s key levels.
As always, please use protective buy and sell stops when trading futures and options.
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