Market Review
Polaris Trading Group: Taylor 3 Day Cycle Author: David D Dube (PTGDavid)
Prior Session was Cycle Day 2 (CD2)…PTG Daily Trade Strategy (1.14.20) we wrote: ”Normal for CD2 is for some “back n fill” price action to absorb prior session’s rally from CD1 Low (3265). Key Line-In-Sand is marked at 3280 handle.” Cycle Price Objective 3294.50 was also fulfilled during RTH Session.”
This leads us to today’s Cycle Day 3 (CD3). Key “Line-In-Sand” Level 3280 was tested a number of times and has held firm. This level is now marked as “Key Decision Point Support” for subsequent sessions. Bulls continue to be responsive buyers on all dips to key support.
Penetration and hold above 3290 – 3295 zone keeps Bullish Bias intact, whereas, Violation and hold below 3280 – 3275 zone opens the trap door for deeper decline.
Screenshot of Cycle Spreadsheet and chart below lists all the Key Cycle Day 3 Target Zones
3 Day Cycle Target = 3294.50 Possible High = 3299.31 Possible Low = 3272.69 Average Range = 21.75
Closing Prices
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In the Tradechat Rooms
The MiM
Big sell on the MiM and down we went. Very large imablances, like over $2B, are the worst kept secret in the markets and down we trade as everyone knows. It ain’t real until the reveal at 3:50 pm ET when the orders are locked and sealed for a whole 5 minutes. At the reveal, we flashed a 3.2B sell, that bottomed the market (note: it did not set a capper, though, as seen below in the HFTAlert app). A nice recovery was had into the close with two great buying bars. Still buying the dip.
HFT Alert
These days I am usually heads down into tech rather than heads up into the markets. I keep charts and chats up always but just for slide glances. Our HFTAlert app, which I invited you to test out at https://h2.fortunesrocks.me:3663/, is also always running. There are two alarms on the app. One for high-frequency trades, which fires very often, and one for the program detector, which fires off a different sound for each level, with the capper sounding a full out Star Wars theme. When this fires, you know it no matter what you are doing and if it is all out, like our 5 cappers at 1:37 pm ET, it is news. I have to say, our room members enjoy complimentary Live Squawk audio and as the war was subsiding the source of the news was given to us. All in a very fast second. If you haven’t heard, the tariffs on China are going to stay until post-election. It is nice to have tools.
Help us test free @HFTAlert app
Economic Calendar
| Globex | Day Session |
| High 3296.75 Low 3275.25 Volume 309,000 | Opening Print 3286.50 High 3286.50 Low 3277.25 ES Settlement 3288.00 Total Volume 1.6M |
#ES Pre-Tariff Deal ‘Headline Hell’
The ES traded in a 21.5 handle trading range on Globex from 3296.75 (new all-time contract high) down to 3275.25 and opened Tuesday’s regular session at 3286.50. After the open, the ES made a series of lower highs and higher lows down to an early low of 3279.00 at 9:00 am CT. After the low, the ES rallied back up to 3286.75, pulled back down to the prior pullback low at 3281.25 then rallied up to 3287.75 at 10:45. After a small pullback down to the vwap the ES rallied up to 3295.00, up 6 handles on the day and up 20 handles off the Globex low. I was short at 3293.75 and thinking of getting out as these two headlines hit the tape:
*CHINA TARIFFS TO STAY UNTIL AFTER U.S. ELECTION DESPITE DEAL
ROCKETS LANDED NEAR ONE OF THE GATES OF CAMP TAJI NORTH OF BAGHDAD, INJURING A MEMBER OF THE SECURITY FORCES
Initially, the ES didn’t move but after the second headline, the ES got hit by several sell programs pushing the futures down to 3282.50. I covered at 3286.50 and 3287.50 which was correct as the ES traded back up to 3292.75. The next move was back down to a higher low at 3283.50 and that is where I made a fatal mistake, I got long. The ES rallied back up to 3288.25 and got ‘slammed’ down to 3277.25. I went from up $600 to down $1,200 and lost another $550 trying to get long again. I eventually caught a long at 3281.25 and the ES rallied 12.50 handles up to 3289.75. I made all my money back and ended up $400.00 on the day.
After the 3289.75 high the ES sold back off down to 3284.50. At 2:00 the ES traded 3286.00 as the early MiM showed $1 billion to sell and went out to $1.9 billion for sale. The ES traded 3281.00 at 2:30, traded 3284.50 as the final 2:45 cash imbalance showed $1.78 billion to sell. The ES traded 3283.25 on the 3:00 cash close and settled at 3287.50 on the 3:15 futures close, down 1.5 handles or -0.05% on the day.
In terms of the ES’s overall tone, all I can say is the ES acted skittishly. In terms of the day’s overall trade, 1.65 million ES traded with 309,000 of that coming from Globex making the total day session volume 1,431 million futures traded.
Chart of the Day
Our View
@WallStreetJournal The Fed Didn’t Cause the Latest Stock Market Melt-Up
The Wall Street Journal says the Central bank action probably isn’t the main cause of the stunning rally in Tesla or stocks more broadly. That may be correct but it sure added to it. With over $300 billion sidelined and ready to be put to work in the U.S. stock market, ‘gigantic’ end of the year stock market inflows, and add in the Fed’s QE4, it’s been like throwing gasoline on the fire.
Today the U.S. and China are supposed to sign the trade deal. If anything goes wrong the ES will tumble. There are a lot of folks that think you’re supposed to sell the news once the agreement is officially signed but in all honesty, I don’t think selling the news has worked all that well.
Our view, I still think the ES can go higher but the risk goes up as it does. There has been a lot of stock market ‘bubble’ talk recently and while I do not disagree, I really do not think there was over $300 billion sidelined in 1999-2000 like there is today. Our lean is to approach today’s trade with an air of CAUTION. The PitBull thinks we are close to a high and pointed out that the Stock Trader’s Almanac says the S&P tends to get weak around 15 sessions into the new year. And if you don’t think there is a bubble going on just pull up a chart of FB and AAPL.
PitBull: *OSC=Oscillator
CLG osc -29/5 turns up on a close above 5854, ESH osc 17/19 turns up on a close above 328158, VIX osc -11/0 turns down on a close below 1177
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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