Last week I wrote: “Perhaps a [COVID-19] relief bill will send the ESU20 to all-time highs.” Well, it was not a Congressional COVID-19 relief bill which is still being negotiated as of Monday’s stock market close, but rather weekend executive orders from President Donald Trump meant as stop gap relief measures and leverage to pressure Congress to hasten the bill negotiation.
The back-adjusted Feb 20 ESU20 all-time high of 3345.75 held last week’s trading and with Monday’s 3357.25, technically, the Feb 20 resistance is not cleared yet. Once a Congressional coronavirus relief bill is announced, the ESU20 should pop higher into virgin, all-time high prices.
The ESU20 continues to work its uptrend well above its 50-day moving average. Monday’s probe of the Feb. 20 high leaves no structural resistance above. A strong, nearly 100 ESU20 point uptrend of higher lows every day in August makes choosing which lows will ultimately become support difficult. The clearest support is way down around the 3200s, the range of 3190 to 3112. Until there is more clarity next week, I’m cutting up ESU20 support based on daily lows and the Aug. volume profile as follows:
ESU20 support levels:
3322 to 3329 – Aug 5 to Aug 8 resistance to support area
3292 to 3300 – Aug 3 to Aug 5 resistance to support area
3255 to 3271 – Aug 3 to Aug 4 lows
3190 to 3112 – Jul 14 to Jul 21 resistance to support area
Volatility continues to shrink as the ESU20 grinds higher. Eventually we’ll have volatility increase with a correction or pullback to the downside, but for now, the easy money from Fed, federal, state, and local stimulus programs will keep stocks afloat while devaluing the US dollar.
Below is a snap of the ESU20 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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MOC was a weak sell at the 15:50 candle and the market responded by bouncing back from the sell that started at 15:00. A tight 10-point range had the market moving sideways into the close.
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We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quickly as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).
New daily cases continue to drop in FL and TX. CA has a data crisis going on and we have lost our footing and are off-balance until they have caught up and returned to data normalcy. CA will need to figure out how to process 5x their peak workload moving forward.
We continue to focus on our top 3, Florida (20M pop), Texas (30M), and California (40M) looking at daily deaths, but more importantly, changes in the count.
We should have across the board under numbers in daily deaths today in FL,TX and CA. California is the wild card as they settle out their current data crisis. We should have good down-side progress on our charts tomorrow. Check in!
Over / Under
These are the over/under numbers for today. In order to push the 7-day average lower, today’s reported numbers need to be lower than the target number. A new case or death number that is higher will increase the 7-day average.
Yesterday’s over/under numbers and actual are also in the table.
|Florida||4,752 / 4,155||73 / 93||5,446||247|
|Texas||11,529 / 4,455||179 / 31||9,167||245|
|California||5,739 / 7,751||32 / 66||4,526||113|
|New York||545 / 476||2 / 6||746||3|
Use today’s number to watch the releases to determine the trend.
To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.
Wear your masks!
Chart of the Day
|(ESH20:CME) GLOBEX Session||(ESH20:CME) Day Session|
|High 3355.50||Opening Print: 3350.00|
|Low: 3335.00||High 3357.25 (@mid-afternoon)|
|Volume: 188,000||Low: 3329.00 (@mid-morning)|
|ES Settlement 3352.50|
|Total Volume 1.78 Million|
S&P 500 RECAP – Trade Date 08/10/ 2020
#ES Money Maker Chart
Buy Dow / Sell Nasdaq
After grinding higher in the overnight session to 3355.50, the S&P 500 futures opened Monday’s regular trading hours at 3350.00, up 4.75 handles, and went on to trade the morning early, on the open, at 3555.25 before reversing and turning lower as strong selling at 9:30 pushed the ES down to what would hold as the low of the day at 3329.00 just after 10:00 am CT. The late morning saw a rally that would push the benchmark index future back above the open.
The afternoon was a slow chop with the S&P’s maintaining a 10-handle range and the market would print the high of the day at 3357.25 as the futures went into the final hour of the day. The ESU20 settled at 3352.50, up 6.75 handles or +0.17%.
In terms of total volume, the trade was a modest 1.78 million contracts, in terms of price action, it was all about buying the mid-morning pullback and holding on into the afternoon.
Can the #ES Close Up 9 In A Row?
I told my forum yesterday that from ES 3350 the next 40 handles are down. I have had a pretty good record of calling these types of pullbacks but when the CAC, DAX and FTSE all opened up almost 1% and kept moving higher and the ES jumped from up 5 handles to up 24 and the VIX dropped down to the 21 area it is an even tougher call. That said, I also know and understand the consequences of trying to pick tops over the last few months. As of this morning, the Globex high is 3379.00, 20 handles off its all-time high or just 0.76% away. There were two headlines overnight, the first was President Trump talking about cutting the capital gains tax and President Putin claims that Russia has registered an effective coronavirus vaccine that forms immunity and that one of his daughters has already received it.
Our view, it’s funny, last week I said it wasn’t a matter of if the ES would make new highs, it’s just when. The relentless rallies and COVID19 cases jumping to new highs and the U.S. economy in ruins the buyers are just not letting up. Just because the ES continues to really it doesn’t mean there isn’t reason to be concerned. Our lean, if the ES opens near its high we would look to sell the open, look for the pullback, cover and look for a place to be a buyer using tight stops. Big gap ups can use up a lot of buying power. Lastly, I have seen many extended rallies but in most cases, they tend to get stretched out going into 9 and 10 days runs.
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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