Prior Session was Cycle Day 3 (CD3); We noted in the Daily Trade Strategy Briefing: “Price is below Cycle Day 1 Low (3280.50) and should it stay below, then technically it will be registered as a “failed” cycle statistic. Rare in that this occurs only 10% of the time.” We then stated: “Bulls have one objective today. Stem any further selling and recover CD1 Low 3280.50.” Bulls stampeded and pushed price higher recovering the CD1 Low (3280.50). With a 90% probability of this occurrence, the Positive 3 Day Cycle Statistic was secured.
Today begins a new Cycle Day 1 (CD1), Normal is for a decline with the Average Decline measuring 32.60 handles. The average Range recorded over 20 Cycles is 30.14 handles. Possible High for CD1 = 3297.55 IF Prior High (3285) is Penetrated. Odds of Decline > 10 = 73%; Odds of Decline > 20 = 44%
I will be presenting at NinjaTrader EcoSystem Webinar this Thursday, January 30, 2020, at 4:15 pm EST, Topic: “Learn the PTG 3-Day Cycle (a.k.a. Taylor Trading Technique) Special Bonus Offer for attendees, so be sure to register for Webinar Event: http://bit.ly/36GPCV1
Thank you and looking forward to seeing you at NinjaTrader’s Webinar Event
In the Tradechat Rooms
Roller coaster MiM and a topsy turvy market. Starting early with a buy just to tease, the MiM showed its true colors by 3 pm ET turning negative and never looking back. The rise from 3:30 was a cause to question, but as the MiM continued to move more negative the market gave up its bullish sentiment and closed about 5 points from it’s 3285 high.
Half as many programs today as yesterday. NIce capper at 11:22 which saw that market just zoom higher.
S&P 500 Futures: Don’t Trade What You Don’t Understand
I know some people will say this is hogwash but when the headline hit midmorning yesterday that the Global Times was reporting that China was likely to have a vaccine for the coronavirus within the next three months and the ES was rallying so much on Globex Monday night, all I could think of were the words ‘front run’. You can say whatever you like, but how does the S&P go from looking horrible, bad headline after bad headline, closing down 1.6% yesterday and without one good piece of news be up 1.2% at 1:15? I do not know who they are but someone had to know something.
After trading down to 3238.75 on Globex Monday night the ES rallied all the way up to 3265.75 yesterday morning and traded 3257.25 on the 8:30 CT futures open, up 27 handles on the day. After a small pullback down to 3251.75, the ES got hit by several buy programs and then traded up to the 3275.00 area, pulled back a few handles and traded up to the 3277 area. After a pullback down to the 3272 area, the ES rallied 10 handles up to a new daily high at 3282.25 around 1:15 CT. After the high, the ES pulled back down to the 3279.50 area, back and filled a bit then rallied up to new highs at 3285.00, up 44.25 handles or 1.35%.
At 2:00 pm CT, the ES traded 3281.00 and the early MiM showed $100 million to sell. The ES then traded down to the 3278.00 level, traded 3283.50 at 2:30 and the MiM increased to $800 million to sell, and the ES traded 3279.50. At the 2:50 cash, the imbalance showed up big with $3.1 billion for sale. The ES traded 3275.25 on the 3:00 cash close and settled at 3277.25 on the 3:15 futures close, up 36.5 handles or +1.13% on the day.
In terms of the ES’s overall tone, it acted very firmly but most of the buying was the shorts getting squeezed out. In terms of the day’s overall trade, volume was high 1.8 million futures traded.
Predicting The Unpredictable
I think it’s fair to say that I do not know, nor does anyone else, what the S&P is going to do next. I have to admit… my calls have not been good but my trading has been. As I have always said, I am more about reading volume and following premium levels and the tick than I am about following trend lines and technical analysis. As I said on Twitter, I always try my best but sometimes it’s not good enough. I do think the news has been trying to put a positive spin on coronavirus that it’s all going to be over in a few weeks. So far this week it’s been all about the up a day down a day price action. Our lean is to sell the early rallies and buy the pullbacks. Lastly, today is day two of the Fed’s two-day meeting, be on the lookout for headlines related to a shift in gears of the Fed’s short-term treasuries buying that’s slated to continue into the second quarter. The Fed’s balance sheet has grown from $3.8 trillion to $4.2 trillion since October. How much more money can they print?
Wednesday, Jan. 29
$ANTM Anthem | BMO $BA Boeing | BMO $GE General Electric | BMO $MA MasterCard | BMO $MCD McDonald’s | BMO $NDAQ Nasdaq | BMO $FB Facebook | AMC $MSFT Microsoft | AMC $PYPL PayPal | AMC $NOW ServiceNow | AMC $TSLA Tesla | AMC $URI United Rentals | AMC
Thursday, Jan. 30
$BX Blackstone | BMO $KO Coca-Cola | BMO $LLY Eli Lilly | BMO $HSY Hershey Foods | BMO $NOC Northrop Grumman | BMO $RTN Raytheon | BMO $SHW Sherwin-Williams | BMO $UPS UPS | BMO $VZ Verizon | BMO $XCEL Xcel Energy | BMO $AMZN Amazon | AMC $EA Electronic Arts | AMC $LEVI Levi Strauss | AMC $V Visa | AMC $WDC Western Digital | AMC
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As always, please use protective buy and sell stops when trading futures and options.
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