Premium OP: Rocky Road Ahead

by Danny Riley
on July 22, 2020

Market Review

Polaris Trading Group: Taylor 3 Day Cycle  Commentary      Author: David D Dube (PTGDavid)

***Written 8 pm Tuesday evening for Wednesday’s trading

Tuesday’s Session was Cycle Day 1 (CD1): Early price gap strength pushed price to CD1 Penetration Levels where resistance developed, stemming further advance. Consolidation was the theme on this day following a trend up, which capped the prior Positive 3 Day Cycle. Price did finally produce a decline (as expected on CD1) late in session. Range was 34 handles with 1.4M contracts exchanged.

 …Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): Late day sell-down in the prior session established a CD1 Low (3239.25) before snapping back higher into settlement. We then have two scenarios to consider for today’s trading.

 1.)   Price sustains a bid above 3240, initially targeting 3255 – 3260 zone.

 2.)   Price sustains an offer below 3240, initially targeting 3235 – 3230 zone.

 For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet >> Cycle Day 3

Thanks for reading,

PGTDavid
Polaris Trading Group

Economic Calendar

Closing Prices

In the Tradechat Room

MiM

Flipping MIM. Early buy around 120M dissolved into a sell with a final MOC at 15:50 of 1.4B to sell. That was a bit larger than expected and triggered a massive sell program that ate 10 points off the price. We did get our 15:55 buy back.

Questions?  Please email me: Marlin@mrtopstep.com

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

Covid-19

Top 10 Worst
Top Ten Best

We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quickly as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).

Dim light in the tunnel. Florida’s new cases so close to reversing the trend, it is crucial that they stay below today’s over/under of 10,181.
The Texas top right now is a plateau. Texas over/under is a low 7,307, anything above will trend back up, anything below would be great news.
We don’t like that tick up in the CA new cases, the over/under is around 11,126 which seems beatable.. stay tuned

We continue to focus on our top 3, Florida (20M pop), Texas (30M), and California (40M), looking at daily deaths, but more importantly, changes in the count.

All eyes are focused on the big three as we see how they pass through the crunch. Thursday will be the big day for Florida and we had predicted 200+ deaths based on math for Thursday. Yesterday was good though and that growth has slowed and if today’s number of deaths is below 112 (or near) then we will not reach that.

Texas still has not shown any real bend or slowing as it takes the lead in daily deaths with large CA bumping along around 100 and smaller Flordia was shy of 120 and slowing down.

Unlike the previous two states, California has slowed the deaths before the new cases. Today they need to be under 140.

Over / Under

These are the over/under numbers for 7/21/2020. In order to push the 7-day average lower, today’s reported numbers need to be lower than the target number. A new case or death number that is higher will increase the 7-day average.

Yesterday’s over/under numbers and actual are also in the table.

YesterdayYesterdayTodayToday
StateCasesDeathsCasesDeaths
Florida9,194 / 9,440133 / 13610,181 / 9,785112 / 140
Texas10,745 / 9,30587 /1317,307110
California7.346 / 9,23147 / 6111,126 140
New York912 / 8555 / 2769 / 626 9 / 7
Yesterday’s number are the over-under number / actual. An actual that is greater than the over-under number will send the 7 day average higher (not good) a lower number will send the 7 day average lower (good).
Use today’s number to watch the releases to determine the trend.

To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.

Wear your masks!
Stay Home!

Chart of the Day

Top Stories on MTS Overnight:

Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 3273.25Opening Print: 3213.75
Low: 3241.00High 3260.00
Volume: 300KLow: 3205.25

ES Settlement 3252.00 up 7.5 handles or +o.23%

Total Volume   1.06 Million

S&P 500 Recap 7/21/20

TECH SELL PROGRAMS

The ES traded 3213.75 on yesterday’s 8:30 futures open. After the open, the ES traded down to 3258.00 at 8:42, rallied back up to 3266.25, and then pulled back down to 3255.50 at 11:36. After the drop, the ES rallied up to 3268.00, 3 ticks off the high at 1:18 and then reversed as mutable tech sell programs hit and the NQ started selling off sharply. During the drop the ES made 9 separate lower lows trading all the way down to 3239.00 after the MIM came out $1.4 billion to sell. On the 3:00 cash close, the ES traded 3248.25 and settled at 3252.00 on the 3:15 futures close, up 7.5 handles or up 0.23% on the day.

In terms overall tone, the ES but more so the NQ was ‘spent’ after Monday’s enormous rally but both the ES and NQ rallied into the close. In terms of the day’s overall trade, total volume was 1.44 million which includes 300,000 contracts from Globex.

Our View

Rocky Road Ahead

Our View:

No one promised us a rose garden. As traders, we step up to the plate and we swing, it’s what we do. Sometimes we hit singles and doubles and occasionally we hit a triple or a homer and sometimes we strike out but we always come back swinging. For traders, it’s kind of a ‘best of times worst of times’ scenario. COVID19 has kicked up volatility and caused enormous losses but it’s been paying off in spades for traders. While this may not apply to all the ES moves, you can trade your way back from losses if you are patient enough.

On Monday you could literally buy the NQ at any price after the early pullback, it just kept going up and up and up and yesterday it was almost the exact opposite, all you had to do was sell every rally. I have to be totally honest; I don’t know for sure what the ES is going to do next but if I had a gun to my head I would say we are going to see the ES above 3420 and higher. When, do you say? Well, that will be after a few more dips and some good old back and fill.

Our view, if the ES gaps higher today my lean would be to sell the open, buy the pull back and find a nice low to get long. If that works I will wash my car at 11:00, eat lunch at 12:30 and then come back at 2:00 CT and play the MIM. If none of that works I’ll have to play it by ear. 

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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