Market Review
A battle over the 200-day moving average continues. The ESM20 has been working a near 200-point range between 2700 and 2900 while the bears and bulls try to hold the 200-day moving average which went from resistance to support to resistance to support. If the bulls can clear the 2885 previous swing high, then they could take the ESM20 back up to the significant resistance area under 3100. There’s plenty of potential resistance between Monday’s 2869 settlement but the market is looking for any hopeful news to move up. Earnings from the triple As (Apple, Amazon, and Alphabet) this week, could provide the fuel the bulls (or bears) need to move out of the 2700/2900 range.
Volatility continues to fall. The ESM20 5-day average daily is down to 83.6 points with Globex hours often providing a significant portion of the daily moves. It was only 5 weeks ago when the 5-day ATR was 293 points.
Structural support and resistance remain the same as last week. The difference is the ESM20 is starting to lean short-term bullish again, they just need to clear the 2885 resistance area.
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
Selling into the close after another strong up day, some profit-taking. Again, although the top-line number looked promising, that #% at just 52% shows there was no breadth, in fact, the top line again was driven by Appl and Amzn, the broad base NYSE was flat. That 3:53 almost every day sees those symbols paired away.
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Globex
| (ESH20:CME) GLOBEX Session | (ESH20:CME) Day Session |
| High 2865.00 | Opening Print: 2849.00 |
| Low: 2812.75 | High 2881.25 Late |
| Volume: 300,000 | Low: 2843.75 |
| ES Settlement: 2868.50 | |
| Total Volume: 1.2 M |
S&P 500 Futures: #RTY Russell 2,000 UP 4%
It’s not always the big dogs, the S&P and Nasdaq, pushing the markets around. Sometimes the small caps take the lead and that’s what the Russell 2000 did when it leapt 4% yesterday. At yesterday’s close, YTD, the S&P was down 10.9%, the Dow was down 15.43%, the Nasdaq Composite was down only 2.7% and Russell 2000 was down a whopping 23.17%. I know that markets have bounced but I think there are ‘black clouds’ forming on the horizon. The Trump administration is talking about a big ‘third and fourth’ quarter and I think that’s right but I think the economy is really going to start to struggle. I also think the US government should start thinking about the food chain. The news is that there will be meat shortages in the next two weeks but I have news for you, there already are shortages. How is the government going to contain the public? As spring starts to break into the early summer more people will take to the streets. I know we have to open up the economy but we can’t have the virus re-spread to the population. Things will get shut down again and the ramification of that will be more severe than the original closures. Things are constantly evolving, some for the good but mostly for the bad.
The ES traded 2849.00 on yesterday’s 8:30 CT futures open. The ES sold off down to 2843.75, then slowly traded up to 2871.75 at 11:39 CT. The ES pulled back down to 2859.25 and traded 2869.25 at 1:15.
At 2:00 CT the ES traded 28271.75, traded 2873 at 2:30 and traded 2879.25 as the 2:50 cash imbalance showed $760 million to buy. On the 3:00 cash close the #ES traded 2869.25 and settled at 2868.50, up 39 handles or +1.4% on the day.
In terms of the ES’s tone, it was firm Sunday night, firm on the open and firm all day. In terms of the day’s overall trade, a total of 1.2 million ES contracts traded with 300,000 from Globex making total volume very low at 900,000 in the day session.
Our View
2930-2950 ON TAP
A couple of rules that I think are important to remember, the first is don’t fight the fed and the other is thin to win. There was no way the S&P was going down yesterday. Even my ‘selling’ the gap up open didn’t work. I tried to sell it several times and it barely went down and every time it did it made a new high. The pullbacks were shallow. I am going to say it like it is, we are not here to fight city hall but this rally is going to be FAKE NEWS at some point. It kind of reminds me of the rally in 1933 after the 1929 crash but this rally isn’t going to last 3 or 4 years.
Our view, I knew pretty much right away that selling the gap up was not going to work. The NQ would downtick and the ES would barely budge and when it did sell off a few handles the RTY was right there helping press the index markets higher. Our lean, as long as the volume is this low the odds favor the upside, buy the early pullbacks. Today is day one of the fed’s two-day meeting and also the first of three days of big tech companies reporting.
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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