Market Review
Continuing with the high-level review theme of the last 2 weeks, let’s take another look at the ESM20 daily bars. Last Friday, the ESM20 catapulted over the 200-day moving average on positive and hopeful results from Gilead Sciences’ (GILD) remdesivir antiviral drug which helped almost all Chicago coronavirus test-group (125) patients leave the hospital in under a week. However, the ESM20 move was just a probe for now until the ESM20 can move higher, clearing 2885. On Monday, the ESM20 US session closed back below the 200-day moving average. If the ESM20 continues down further today, we could see a significant selloff this week, perhaps retesting the 2424.75 swing low.
Volatility continues to shrink. The 5-day ATR is 88.5 points which is still a wide daily range for the ESM20. Volatility is more likely to increase to the downside than the upside. Looking at the downside, there is plenty of structural support below near 2746/51, 2700/11, and 2620/23 before the 2424/49 swing low area. Between 2530 and 2620 there is a low volume area for April which could be worked for a few days if reached.
Looking at the upside, the 50-day moving average is around 2975, just below the psychological 3000 number. I would expect some resistance around the 50-day moving average. Over the last 4-year uptrend, the 50-day moving average provided support every time it was touched. Areas of structural resistance will be 2875/85 and 3071/95.
Below is a snap of the ESM20 daily chart with the above support and resistance numbers marked for reference. Thanks again for reading. For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com
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MiM
Our opening MOO was quite the sell on Monday and we expected that selling to continue for the MOC at 3:50 pm. Piling on the oil fiasco we expected a larger MiM, I took this MOC as longer term bullish and waiting for today’s open and market action to dictate expected direction for the close. That 3:45 rally into the number was there again giving opportunity to slightly front run the MOC. Also that retracement of the 3:50 pm candle has been a good trade and easier to get in on.
Questions? Please email me: Marlin@mrtopstep.com
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Chart of the Day
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2875.50 | Opening Print: 2850.25 |
| Low: 2708.00 | High 2985.00 |
| Volume: 536,000 | Low: 2804.25 |
| ES Settlement: 2806.50 | |
| Total Volume: 1.96M |
S&P 500 Futures:
The ES traded 2875.50 on Globex and made a low of 2808.00 and opened Monday’s 8:30 CT futures open at 2822.75. The ES rallied up to an early high of 2838.00 and then sold off down to 2819.00 early. After the low, the ES rallied all the way to2854.50 at 10:06 CT. After the push, the ES traded back down to 2844.25 at 10:15 and then rallied up to 2861.00 at 10:36 CT. The ES then sold off down to 2814 going into 2:00.
At 2:00 CT the ES traded 2820.00, traded 2819.50 at 2:30 and traded 2817.00 as the 2:50 cash imbalance MiM showed $700 million to sell. On the 3:00 cash close, the #ES traded 2815..50 and settled at 2806.50, down 63.5 handles or -2.23% on the day.
In terms of the ES’s overall tone, oil stock weighed down hard on the DOW and S&P. In terms of the day’s overall trade, total volume was 1.96 million contracts traded minus 536,000 from Globex making total day volume 1.42 million contracts traded on the day session.
Our View
Oil Falls To The Lowest This Century
I’m not sure I was reading this right but I think I saw May crude oil down over 450%. I think we all know crude option expirations can see some very big moves but yesterday was not like anything I have ever seen. The CLK20 was trading in double digits early then fell to single digits then fell to pennies and then turning negative for the first time in history. Let’s face it, Trump’s push to get the Saudi’s and the Russians to agree to meet was as they say… a little too late! And while the US is fairly new to being an exporter of crude oil the infrastructure, storage capacity, and transportation has just not kept up. With the world over producing 20 million barrels a day the guilt has the world running out of places to store it. In the US there is over $100 billion in bank loans for top US shale producers. And you know what? Oil may rally a bit but I do not think we have seen the lows yet!
Our view, I think we are in for a rally in the ES today and Turn Around Tuesday. If oil falls again the ES will go for the ride but I think you buy the weakness. That doesn’t mean I won’t sell a gap open but ideally, I think buying weakness is the call for the day.
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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