Market Review
For the ESM20, last week was about breaking free of the 2700/2900 range it has been working since April 9. A breakout attempt was made on Wednesday and on early Thursday, the ES slammed into the 50-day moving average and sold off. Now (as of the close Monday), the ES is right back in the middle of the 2700/2900 range, pretty much the same area it was in last Tuesday.
Was last week’s breakout a head-fake higher and we’re now looking at a significant move down? Or was the breakout and following move down a pullback and part of a potential move to prices above the 50-day moving average? The 200-day moving average now positioned near the 2700 range bottom is key. If it is tested and holds, the ESM20 should move higher. If the ESM20 fails to reach 2700, that’s also bullish. If the 2700 area is cleared, the ESM20 could tumble to the 2450s area.
Structural resistance which aligned under the 50-day moving average last week was probed, but the 2950s area ultimately held. All other structural support and resistance areas remain the same as last week.
Volatility has leveled off with the ESM20 averaging about 80-point ranges per day. Volatility is still elevated but feels much slower than recent weeks.
Looking at the combined volume profile (right side of chart), the ESM20 is in a well-worked area and the profile provides little guidance between 2400 and 3100, a wide range that the ESM20 could work for weeks, if not months.
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
Not sure if the algos tried to front-run the MOCs but they were tiny and right down the middle. That push down at 3:50 was chased right back up and again we closed the day right around the 3:50 candle close after 4 down. The markets have resumed a normal trading range.
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2820.75 | Opening Print: 2804.25 |
| Low: 2771.00 | High 2835.75 |
| Volume: 440,000 | Low: 2788.50 |
| ES Settlement: 2825.25 Up 8.25 handles or +0.29% | |
| Total Volume: 1.6 M |
S&P 500 Futures: Buy NASDAQ / Sell S&P
When you look at the index indices there is always one under and over performing. The reason for this is called ‘sector rotation’. These rotations occur when money moves from one industry to another. A few weeks ago the Russell 2000 that was down 31% on the year rallied 10% in two sessions and during that time the Dow and S&P underperformed. Yesterday’s rotation was very visible, selling the S&P and buying the Nasdaq. Just taking a shot in the dark but I bet the S&P outperforms the S&P today. It works that way on most occasions.
The ES traded 2804.25 on yesterday’s 8:30 CT futures open, traded down to 2788.50 at 8:40 AM, traded up to 2811.50 at 9:04, pulled back down to 2803.50, and then rallied back up to 2812.25. After the push, the ES sold back off to 2801.75, made a higher high at 2817.27 at 11:36 and then dropped 28 handles down to 2789.50. The ES then rallied 26 handles back up to 2815.50 at 1:33. After the rally, the ES dropped 7.5 handles and then rallied up to 2826.50 just after 2:00.
At 2:30 the ES traded 2819.25, traded 2831.00 as the 2:50 cash imbalance and showed $846 million for sale. On the 3:00 cash close, the #ES traded 2835.00 and settled at 2825.25, up 8.25 handles or 0.29% on the day.
In terms of the ES’s tone, it was definitely being held up by all the buying in the Nasdaq. In terms of the day’s overall trade, a total of 1.65 million ES traded with 440,000 from Globex making total volume 1.21 million on the day session.
Our View
Auto Sales
Auto sales world wide have dropped sharply, some say as much as 80% to 90%. April was the worst month for auto sales since the 1970s. One stock I was looking at when the markets were tumbling was Ford. Why? Because it’s a rough and tumbling company that has weathered the story and pays a dividend. Another area was oil companies. I know the markets have rallied and some investors are asking themselves if they missed the long? My answer right now would be yes but I am not sure that’s how this is going to be when Trump starts opening up the US. My thought is the markets have already rallied in anticipation and that it will end up a sell the news event. There was a story in the WSJ titled ‘How Florida Dodged the Bullet’. Was Florida lucky or smart ? I think a bit of both. Mr. Walt Disney World had already been shut for two weeks when DeSantis restricted visitation to nursing homes but he left early lockdown decisions to local authorities. Mayors in some hard-hit large communities shut down faster and more aggressively than the state, gaining valuable time. Only time will tell how the reopening of the economy will end up but I have my doubts.
Our view, I think we rally for the next two days, buy the pullbacks. 2874 and then 2900+ is on TAP.
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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