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Market Review

Looking Forward Friday, June 26, 2020

The rally 3039 up to 3079 from 3:05 to 16:10 marker added 40 points to the bull story. Currently, Globex found the 3082 handle at 00:30 marker. As I write this Globex is trading as Supply has entered in and the price is drifting down to 3056 at 3:25 marker. What happens after that I do not know. I would surmise a move to the halfback as the current price is trading.

Wyckoff would say a move to the half-back shows strength for the bulls. And move further down would indicate weakness, which of course favors the bears. In today’s trading if the price gets below sixty-two percent of the rally, then a high probability price will trade all the way back down. 

Some would call that a liquidy vacuum in 2020 that algos rule in. Ideal support is 3049 handle. Less ideal would be all the way back to 3039 handle. 

We had a good week this week. Our subscribers have been very lucky with the levels given: 7 points Monday, 12 Tuesday, 80 points Wednesday, 25 points Thursday. Total for the week 124 points, that would be $6,200 on 1 lot and $18,600 on 3 lots.

That’s due to the volatility that crept back into the market. 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. If you have not taken the time, now would be a great time to subscribe.


Economic Calendar


Closing Prices


In the Tradechat Room

MiM

A rally into the close. From a 14:20 saddle up to the 16:00 candle was a 40 point move on a non-committed MiM. Even the reveal showed a decent buy and sell imbalance but it all netted to neutral. We were just exchanging stocks for stocks. Everyone was focused on the Bank news at 16:30. We should see some more rebalancing on the close today.

Reminder:  June is Russell 2000 reconstitution month.  Here is the schedule for that: 

  • Friday, May 8 – “rank day” – Russell US Index membership eligibility for 2020 reconstitution determined from constituent market capitalization at market close.
  • Friday, May 22 – “query period” begins – preliminary shares & free-float information for Russell 3000 Index constituents are published daily & queries welcomes (query period runs through June 12)
  • June 5 – preliminary US index add & delete lists posted to the FTSE Russell website after 6 PM US eastern time.
  • June 12 & 19 – US index add & delete lists (reflecting any updates) posted to the FTSE Russell website after 6 PM US eastern time.
  • June 15 – “lockdown” period begins – US index adds & delete lists are considered final
  • June 26 – Russell Reconstitution is final after the close of the US equity markets.
  • June 29 – equity markets open with the newly reconstituted Russell US Indexes.

Questions?  Please email me: Marlin@mrtopstep.com

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


Chart of the Day


Top Stories on MTS Overnight:


Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 3056.50Opening Print: 3034.00
Low: 3005.00High 3079.50 Late
Volume: 483KLow: 3011.50

ES Settlement 3070.00, Up 20 handles
or +0.66%

Total Volume   1.92 Million

Thursday’s S&P 500 (ESU20:CME) Recap

Welcome To T+2 And The End Of The Quarter RIP

The S&P futures opened at 3034.00 on Thursday’s 8:30 CT futures open, traded up a bit and then sold off down to an early day low of 3011.75 at 8:48 as the markets waited on the COVID19 numbers to be released. After the low, the ES rallied all the way up to 3049.00 at 9:30 am CT. After the push up the ES sold back off down to the 3025 area, rallied up to a lower high at 3043.00 and then sold off down to 3024.00 at 10:40. The next move was up to 3052.25, back down under the vwap at 3034 at 1:35 and after that low, the ES went pretty much straight up 38 handles to 3072.25 at 2:35 as the MIM  showed $236 million to buy. The ES traded 3065.00 as the 2:50 cash imbalance showed $230 to buy, traded 3072.00 on the 3:00 cash close and settled at 3070.00 on the 3:15 futures close, up 20 handles or +0.66% on the day.

In terms of the ES’s overall tone, the GIANT rip was about two things: 1) catching people short and 2) the end of the quarter rebalance. In terms of the day’s overall trade, volume was decent at  1.92 million. 

DATA/HEADLINES:  8:30ET Personal Income/Spending, Core Inflation; 10:00ET Consumer Sentiment

Personal income probably fell 6% in May after rising 10.5% the prior month as the impact of stimulus checks waned.  U.S. virus cases hit a record, with more than 39,000 new infections yesterday, surpassing the April 24 peak. Governors are halting reopening plans with Texas, North Carolina, Louisiana and Kansas all hitting the pause button. The silver lining to the surge in cases is that deaths are not climbing at the same rates.  Airline execs meet with Mike Pence today to discuss contact tracing, taking passengers’ temperatures and a threat by the EU to block U.S. travelers.

TODAY’S HIGHLIGHTS: 

U.S. equity futures fluctuated at the end of a volatile week for stocks, ignoring a resurgence in new virus infections across the country.  Banks declined premarket after the Federal Reserve told the biggest US banks that they cannot increase dividends or resume buybacks through at least the third quarter as uncertainty over the course of a global pandemic weighs on lenders.

Today: 

2020 Russell Reconstitution is today: There are 184 additions to the Russell 2000 index along with 142 deletions. • The largest sector inflows are into Information Technology ($7.5bln to buy) and Consumer Discretionary ($1.8bln to buy) and out of Financials (-$3.1bln to sell).  Today’s Russell reconstitution is set to be more significant than usual after the virus-fueled selloff and rally, according to BofA. The number of Growth Index stocks may plunge to 421 from 533 and Value Index membership may rise to 843 from 721, BofA said. Industrials will see a broad rotation out of Growth into Value. Russell 2000 futures are down 0.4% ahead of the market open, holding a short term negative tone below its 200dma.

Our View

Three Trading Sessions Left In the 2Q

Shit, trading used to be fun. I would head to the floor, argue with the customers and fight with all the clerks and brokers in the pit all day, go home and act like it never happened. It was fun going to work, all the people and the roar of the pits. It was as they say; the agony of defeat and the thrill of victory, all rolled into one. But those days are gone and computers have taken over. The BOTs have no feeling, no heart and no soul. They have been perfectly designed to kill the vig and withdraw money out of your account. They do not care if you’re sick and going broke, they want every last penny! They say in August the CME is going to reopen the trading floor. The first of several option pits is going to be the eurodollar options. My guess is the entire effort to reopen is a publicity stunt to make it look like they will but will keep it closed and say ‘Due to COVID19 the floors will be closed permanently’. That will mark the first time in the CME’s 122 years that there will be no more humans trading in any of its pits.  

Our view, didn’t the ES trade down to 3005 on Globex Wednesday night? It’s 8:07 CT and after a complete and total last hour melt-up late yesterday the ES traded up to 3080.00. As I have always said, I do not get the calls from GS or JPM that there is a big sell or buy program coming. My view of the markets comes strictly from ‘pattern recognition’ and a gut feel. I know that may not hold up at Citadel but it’s working fine for me. Our lean is for higher prices. If the ES gaps up we plan on selling the open and buying the midmorning pullback and if it is lower my lean is to buy the pullbacks and then stay out until after 2:00. My guess is no one will go home long over the weekend.

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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Danny Riley (3588 Posts)

Danny Riley has worked in the futures and options industry for 38 years, including the CBOT’s bond room, where he worked for several of the Market Wizards. He went on to build the largest volume desk in the S&P 500 Index Futures, serving some of the largest banks and hedge funds, the UBS program trading business, and some of the world's top individual traders. As a leader and co-creator of the MrTopStep IM-Pro Trading Room, he shares trading ideas and breaking market news live from the floor with our other professional traders and new traders eager to experience the power of collective intelligence. Join us today and get the edge only social trading can give you.


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