Market Review
Polaris Trading Group (PTG) Taylor 3 Day Cycle
This is Polaris Trading Group’s (PTG) inaugural Opening Print Market Commentary which will be posted each Wednesday. Our focus will be on Taylor 3 Day Cycle which I have been using and teaching for over 10 years. For me it “frames-out” the market’s range edges with uncanny accuracy, as it is based on “historical-observed” price data, not some estimated % measurement. Combined with other disciplines such as Market/Volume Profile, it becomes a powerful trading tool.
To learn more about Taylor 3 Day Cycle visit: http://polaristradinggroup.com/ptg-3-day-cycle/
Today is a Cycle Day 1 (CD1), beginning of “new 3-day cycle” Normal expectation is for some magnitude decline with an average range decline measuring 22.25 handles or 3232.25. Note: There will be times when trade action is bullish strong with shallow or even no decline, so we’ll need to make adjustments throughout the trade session. Determining whether the cycle day is unfolding “normal” or “aberrant” early in session will be “key” for tactical trade decisions.
Prior Session Cycle Day 3 (CD3) Price failed to continue the auction higher after fulfilling Cycle Target Objectives, which sets up potential deeper decline IF price stays below 3238 (Line-in-Sand) AND violates 3232 handle. From a Volume Profile perspective, there is a Bearish Imbalance that is in need of completion between 3230 – 3220 zone.
***ALERT: 7:00 pm est Price has declined to 3196 CD1 STATISTICAL EXTREME VIOLATION LEVEL during Globex Trading on reports that US Airbase in Iraq was struck by rockets. Geo-Political Events are always a “wild-card” for normal Cycle expectations.
Bullish & Bearish Cycle Day 1 (CD1) Scenarios
Bull Scenario: IF Price Clears and Converts Prior High (3254.50), THEN upside targets 3264 – 3267 CD1 Penetration Zone.
Bear Scenario: IF Price Violates and Converts Prior Low (3226.00), THEN downside targets 3213.50 – 3209.25 CD1 Violation Zone
Thank you for reading about Taylor 3 Day Cycle and hope it’s helpful…PTGDavid
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
Closing Prices
In the Tradechat Rooms
The MiM
While the MiM was flashing sell, the market went on a run up to the 42.50 area peaking until the MiM started pairing off and then displaying a buy going into the reveal, only to have it flash a short- term sell imbalance which triggered weakness into the cash close.
HFT Alert
A small number of program trades, our MiM-reveal trade showed a sell and the market followed along selling. Just 6 programs all day long so not very active.
Night Trading – IMPRO
Tradechat: IMPRO: Niels :(7:34:24 PM) : L85 IMPRO: Daphu :(7:51:08 PM) : we should be buying IMPRO: lbow :(7:51:09 PM) : that is solid DBoy IMPRO: Daphu :(7:51:16 PM) : but thin and scary here IMPRO: Daphu :(7:51:35 PM) : screw it IMPRO: Daphu :(7:51:47 PM) : buying IMPRO: Daphu :(7:52:02 PM) : 75 stop
If you do not know about index futures and how they work.. each point in ES (the S&p500 future) is worth $50, so 40 points is $2000 profit per contract. That trade is just shy of 50 point actually so $2500.
Economic Calendar
Globex
High 3254.25
Low 3238.00
Volume 264,000
Day Session 1/7/2020
Opening Print 3239.50
High 3244.75
Low 3231.75
ES Settlement 3235.25
|Total Volume 1.199
#ES “Shaky Grounds”
The ES traded up to 3254.25 and down to 3238.00 on Globex Monday night and traded 3239.50 on Tuesday mornings 8:30 CT futures open. After the open, the ES traded up to the 3242.50 area then sold down to 3231.75 and then traded back up to the 3244.75 level going into 10:30 am CT. After the high print, the ES sold back off down to the 3236.00 level and then rallied back up to 3240.00, pulled back a little and rallied back up to the 3241 area and then back down to 3235.75. Just after 3:00, the ES rallied up to 3243.00 as AMZN rallied and the MiM dropped from $600 million to sell to over $800 million to sell.
The ES was trading 3242.00 at 2:30 as the MiM flipped to $217 million to buy, traded 3240.25 as the final 2:45 cash remained $217 million to buy, traded 3236.50 on the 3:00 cash close and went on to settle at 3235.25 on the 3:15 futures close, down 7.5 handles or -0.23% on the day.
In the end… it was a big choppy mess. For the most part, the ES was stuck in a 4 handle range from 3237 to 3241. In terms of the ES’s overall tone, it acted tired. In terms of the day’s overall trade, volume was LOW with 1.199 million futures traded with 240,000 of that coming from Globex making the total day session volume only 959,000.
Chart of the Day
Our View
Money Pouring Into Stocks In 2020
Investors have been pouring money into the stock market at an accelerated pace at the end of 2019 and the beginning of 2020. There was a story in the Wall Street Journal late in November that said there was over $300 billion on the sidelines waiting to be put to work in the US stock market and clearly some of that has been going into stock since the last trading day of 2019 to present.
Let’s face it, there is an abundance of risk out there right now and the ES has gone a very long way in a short time. If you look back to October 3rd, the ES made a low at 2853.50 and made its high at 3263.50 on December 2nd, that’s a 410 handle rally in less than two months. Something has to give.
Our view is to sell the rallies. Near yesterday’s close, 5 rockets struck Camp Taji north of Baghdad that houses US troops. I think ES 3200 or lower is on tap.
Opening Print Rewind: What we said on Monday
Video of the Day
https://www.youtube.com/watch?v=W_5NIDab-YU&list=UUzmFVUlXa-bd6m6QhAflEsA&index=24
Market Vitals Technical Analysis
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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