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Market Review

It should have come as no surprise that overall all groups were weak. Unlike the previous day, where retail was the weakest group.  Yesterday all groups from Banking down to Utility were opening at close, just slightly above or below close.

By my eye, the Banks, Insurance and Aerospace were the strongest up to the 10:00 rally.  BAC, TRV, and BA were the workhorses in the DOW. Of course, BA was strong with tons of volume on the rise up. 

Stepping back at the daily using volume studies Dow Futures shows it the best. On May 18, we had a strong push up of 122,312 volume. Then May 19 increased volume 156,552 and a weak close on the low. May 20 the weakest volume, 104,190, and an attempt to rally back to the high that failed. May 21 (yesterday) a failed upthrust on a slightly increased volume of 117,402.

And now Globex is showing weakness. The idea is to keep your eye on the reaction and see how and if volume increases and can a lower low be found. It’s either a resting spell for distribution or re-accumulation. Too early to tell for now.

I’ve asked a few traders and the lean is to distribution. If you want to participate in the poll I can give you a guest pass for the daily pre-market video I do every day called the Early Read.  I go over the levels for the day and potential turns for the clock. Yesterday, I was two handles short of the 2973 handle. It’s only eight minutes and you have the option to leave early. 

Some do, most stay for the full eight minutes. It’s on-demand so you don’t have to wait. I have a chatbox to the right and you can ask questions and I’ll reply back to you promptly.

We had a good yesterday overall, sure I just missed the 2975 handle by two points but that’s also telling you something. By my eye, the Composite Man felt it was best to get out from under some inventory and use the strength of the above mentioned groups and entice young bulls to the party. 

Sure BA was strong, but all the others were weak. I track 22 groups with four or more securities. That’s how Wyckoff did it. Yesterday on a 60 minute chart that upthrust at 10:30 barely nudged out the high on 5/20 and quickly failed. Volume was low, 242,287 lots. Then at 11:30 ease of movement to the downside on the highest volume back near the lunchtime SLOG of 293,367 lots. 51,080 lots more on twice the grind up with a major push down? And now Globex trading 2909 handle. 

LOOKING FORWARD — FRIDAY, MAY 22, 2020

Currently we seem to be in a sidslabed Australian market.  That’s where the price just keeps going down until someone at the bottom says I’ll take it all. No, not like the low seen on March 23 bottom.

It’s a Friday and there is no real major news catalyst in view. CASH could just consider open or later as value and start bidding back up again.  If there was selling going on, then do they have more inventory left to sell? Do they need to get it back up to sell some more?

Most feel until we get a verified cure the market will be held in this range. Probes up and then a drift down. Globex is becoming more and more an important part of the equation. As long as all eyes are on the death count, it’s going to be a long tale to tell…

The pundits are saying we could have a second wave. Cities are opening up (all but Colorado that is) and getting back to the business of business. Some are following guidelines and some are just throwing caution to the wind. I’m a fan of throwing caution to the wind…

I had been keeping the death count daily but decided we can never move forward by looking back. So I no longer keep the daily count. I gave it a lot of thought. The next ten years will be dramatically different than any decade ever seen before. 

While we can’t change the events of the past or the consequences that will come…we can change our perception and our response to the present moment. We can choose our awareness. How we focus our attention as future events befall our way. The way is lit as you step forward.

It’s been a busy week for me as I’m sure for you too.

I trust you were able to get some profit into your trading account as the market has been very good to traders this week.

This week our subscribers have been given levels they could have printed 14 points Monday, 11 points Tuesday, and 23 points Wednesday and 22 points Thursday

Total so far this week is 70 points. That’s $3,500 on one lot and $10,500 on three. That’s what was possible had they taken every trade recommended.

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.

Click the link below to learn more.


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MiM

Sideshow again for the last hour.  Our early indications were quite strong on the MIM with 75% of the symbols showing a buy imbalance, yet the reveal has us just at -59M to sell, very neutral.  We traded again in a 10-point range into the close. While there was a range in the last hour, about 10 points, there was no direction and that is apparent on the MIM, too.  A small reveal at 3:50 showing a slight buy, that returned the market to about the 3 pm price.   A good oscillator day for trading.  

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 2973.50Opening Print: 2964.50
Low: 2941.50High 2973.00
Volume: 285,000Low: 2933.00 Early

ES Settlement: 2936.75, Down 31.75 Handles or -0.80%

Total Volume: 1.58M

S&P 500 Futures:Buy Dow And Russell 2000 / Sell S&P and NASDAQ

The ES traded 2964.25 on yesterday’s 8:30 CT futures open and made an early day high at 2973.00. After pulling back down to the vwap at 2959.50 the ES traded back up to a low high at 2971.00 at 9:24 CT. After the rally, the ES started to give way to the downside trading down to 2949.00at 9:38. After the low the ES traded up to the vwap at 2958.75 at 9:56 and sold off down to 2933.00 at 10:25, 40 handles off the high of the day. The ES then rallied 22.50 handles up to 2955.50 and sold down to 2942.00 at 11:39. After the pullback, the ES traded up to 2950.75, sold off down to 2943.25, had one last rally up to 2950.25 and settled at 2936.75 on the 3:15 futures close, down 31.75 handles on the day. 

In terms of the ES’s overall tone, it tried to rally but just could not hold. In terms of the day’s overall trade, 1.58 million ES traded with 285,000 coming from Globex making total day volume was slightly high at 1.295  million futures traded on the day session.

Our View

Choppy And Overbought 

Despite the sell-off, the S&P is still on trade for a big weekly gain. Most of the buying can be attributed to optimism surrounding the  U.S. Food and Drug Administration (FDA) fast-tracking the process for experimental vaccines and drugmaker Moderna earlier this week reported positive results from the first human study of its experimental coronavirus vaccine that could be made available this year. Personally, I am cautiously optimistic but as they say… seeing is believing. 

Additionally, the spat between the Trump administration and China is reaching a fever pitch. Late Wednesday night Trump tweeted  that China’s “disinformation and propaganda attack on the United States and Europe is a disgrace.” And followed it up by warning China not to impose new legislation on Hong Kong.   

Our view, I still think the ES can rally but I also think the futures act overbought. We lean to buying the early pullbacks. After that we just want to get a look at the price action, it’s my guess things get real thin and quiet going into the three-day weekend/holiday.  

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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As always, please use protective buy and sell stops when trading futures and options.

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Danny Riley (3550 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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