Market Review

Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 2526.75Opening Print: 2447.75
Low: 2424.75High 2529.50
Volume: 350,000Low: 2446.50

ES Settlement: 2487.75


Total Volume: 1.75M

S&P 500 Futures: #ES Weakness and the Flat Friday RIP

I have written the Opening Print for so long I can’t even remember when I started. I was talking to an old floor buddy by the name of Tony LaPorta who does a lot of trading and is a paid subscriber of my market newsletter and I said ‘I was writing the OP when my partner at the desk and I were flying in and out of Dubai doing all of Sheikh Mohammed bin Rashid Al Maktoum currency futures and options business back in 1996″. I also told Tony that I had religiously written the Opening Print and never missed writing it for 24 years and then I remember that I was writing for 3 years before that. The reason I mention Tony is that he is a subscriber and said that people don’t read it because of all the ‘dips and rips’ but because he gets to hear some stuff the PitBull is thinking and get my CME  S&P floor background and my feel for the markets. He also went on to say that the other part is that I admit when I’m wrong and that he was like that also. My own feeling is that there are certain characteristics that make up a good trader and the biggest ones are knowing when you’re wrong. As the PitBull said in the Market Wizards book ‘one of my best trades I ever was getting out of loser’  

Anyways, I am going to break history. Like the ever-changing world we live in, the Opening Print is about to change. I will no longer be doing the ES recap. With the #coronavirus headlines flying out all day and night long and the ES’s ‘extreme moves’. Writing the OP has been a labor of love but I need to skinny it down. Moving forward I will continue to add the ES chart, the table and the two small ending paragraphs about the MOC and the overall trade and tone.

Friday

With the exception of the early rallies, the S&P traded weakly pretty much the rest of the day trading all the way down to 2446.50 late in the day. At 2:00 CT the ES traded 2474, traded 2475 at 2:30 and traded 2481,00 at 2:50 the imbalance showed $450 million to buy. On the 3:00 cash close, the #ES traded  2479.25 and settled at 2482.75, down -33.75 handles or -1.34% on the day.

In terms of the day’s overall trade, it traded weakly but the late Friday rip improved it. In terms of the day’s overall trade, total volume was VERY LOW at 1.75 million contracts traded with 350,000 coming from Globex making total day volume the lowest in several weeks at 1.4 million contracts traded on the day session. 


Economic Calendar


Closing Prices


In the Tradechat Room

MiM

MiM snapshots are not available for Friday, but we did have a decent buy and as you can see that join and ride the 3:50 candle continues.   The MOC candle has been an awesome trade since the floor closed. Expecting more of the same today. 

Get the skinny when we get it.  Join the MiM. 


Chart of the Day


Top Stories on MTS Overnight:


Our View

Has the S&P Bottomed?

When I look at the wider overall tone of the S&P it really seems to be in a big ‘back and fill’ pattern. It seems like the S&P is now trying to take the bad news and make good of it. The reason, zero interest rate and the world’s largest quantitative easing program have supplied endless liquidity. And lastly, Trump is trying to paint a brighter picture saying he is considering a second coronavirus task force focused on reopening the country’s economy as pandemic cases rise across the United States and VP Pence and a number of state governors said they were seeing a leveling of coronavirus cases. 

As I have said many times, the ES can rally but I just don’t think it will hold. We have just begun to feel the ramifications of the economic meltdown COVID19 has caused. History has shown that there have been several big bear market rallies that die miserably. According to strategists at Ned Davis Research, ‘the steep decline that brought the Dow down 37% from a record resembled a ‘waterfall decline’, marked by persistent selling over weeks, surges in volume, and a collapse in confidence. While no two scenarios are the same, usually such fast falls see the lows tested again”. And of 13 similar plunges since 1929, nine of them saw the Dow break the initial lows. And of the four instances in which the benchmark didn’t fall to fresh lows, it at least retested the bottom in three of them. The only exception was the most recent case: December 2018. Strategist Ed Clissold wrote “we caution against recency bias, the temptation is to breathe a sigh of relief that the waterfall is over and jump back into the market. History suggests that a more likely scenario is a basing and testing period that includes a breaching of the waterfall lows.”

Our view, so to answer the question, no I do not believe the bottom is in. Our lean is two-fold, yes you can sell the big rips but right now it seems like buying the waterfalls is working. The COVID19 spread is going to accelerate in the next 14 to 17 days into the earnings. Tell me I’m wrong but I think it may be a difficult time for the markets.



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