Market Review
Continuing with last week’s ESM20 daily time frame technical analysis, the ESM20 played out the scenario of failing to reach 2700 and the 200-day moving average to remain bullish. The market is now building acceptance between the 2771 swing low (which is now support) and the 2965 swing high (which is expected resistance). The acceptance area building could go on for weeks, or the ESM20 could move into the low volume area above between 3000 and 3175 or the less defined low volume area between 2550 and 2750 below.
Outside of last week’s trading range, the structural support areas above and below remain the same. The 2965 swing high area aligns with the flattening 50-day moving average. Possible scenarios are as follows:
1. If the 2965 resistance can be cleared, the 3090s significant resistance should be reached.
2. If the ESM20 can clear the 3090s, it should move to the 3175 area.
3. If the 2965 resistance holds or price starts heading down from Monday’s close, expect a retest of the 2770s support area. Good chance the area between the 2965 resistance and 2770s holds the ESM20 for another week sans some news that changes trader expectations.
4. If the 2770s are cleared, the bears may get aggressive and we will see a significant move down, possibly below 2500.
As expected, volatility is decreasing as the bulls continue to push higher. Over the last week, the ESM20 average daily range has dropped from 80 points to 60 points. Expect volatility to continue to decrease if bullish buoyancy remains this week.
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
I had hoped to have data issues behind us, but we didn’t and we were blind at the 3:50 pm reveal yesterday which was a decent sell. Buyers chased that 3:50 candle back up leaving quite a tail, but the sentiment of the MOC was correct, our symbol (#%) number was sufficient to show a breadth-supported sell and into the close we sold.
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2947.00 | Opening Print: 2900.00 |
| Low: 2898.75 | High 2937.00 |
| Volume: 405,000 | Low: 2898.75 |
| ES Settlement: 2923.50 Up | |
| Total Volume: 1.49M |
S&P 500 Futures: FAANG / Tech Stocks Save The Day
The markets were weak Sunday night and did what they normally do, they rallied before Monday’s S&P futures (ESM20:CME) 8:30 AM CT futures open. While the Dow and broader market S&P 500 ‘labored’ in the early going the ES sold down to 2895 at 8:32 and rallied up to 2909.50 at 9:06. After pulling back down to the 2900 level the ES back and filled for the next hour and then rallied up to new highs at 2917 at 10:45. The ES then down ticked, back and filled for the next 40 minutes, then rallied up to 2927.75 at 11:10. After another small downtick and some futures back and fill price action the ES popped up to a new high of 2937 at 12:40 and then sold off down to 2927.00 at 2:32.
At 2:30 the ES traded 2930.00, traded 2926.75 as the 2:50 cash imbalance showed $1 billion to sell. On the 3:00 cash close, the #ES traded 2923.00 and settled at 2923.50, down only 5.75 handles on the day but the overnight Globex high to low had a 56.25 handle swing.
In terms of the ES’s tone, if not for the NASDAQ, both the S&P and DOW would have closed MUCH lower. In terms of the day’s overall trade, there were a total of 1.49 million ES traded with 405,000 coming from Globex making total day volume only 1.075 million contracts traded on the day session.
Our View
No Reason To Be This High
When you add all the negatives up there is absolutely no reason for the index markets to be up this much. That said it really doesn’t matter what I think because the S&P is going to do whatever inflicts the most pain. It is how the game is played. When you risk more the markets will take it. When you have a big winner you feel the need to take it and then it keeps going your favored way. Only the algos know when everyone is too long or too short and yesterday’s day trade was a PERFECT example of people being too short and buy stops to run. I do not know the exact date and time but I see dark clouds forming for the stock market.
Our view, if the ES gaps higher I plan on selling the ES. It’s overdue for a few down days and that’s how I’m playing it.
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.
Market Vitals Technical Analysis
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As always, please use protective buy and sell stops when trading futures and options.
Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.
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