Something’s Gotta Give
VIX closes at multi-year lows
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Our View
The average 3 day range is only 12.25 points, the 5 day range is 18 points, the 7 day is 21.14 points, and the 10 day average range is 22 points.
What does this mean? I think it means the ranges are compressing. What does that mean? I think it means that the index markets are getting ready for the next leg up.
There are a ton of buy-stops in the ES that basically go straight up to 5380. It’s 10:05 pm as I’m writing this and the ES is butting up against the 5349.25 level right now. Someone asked me if today’s Fed minutes will have any impact and the only thing I can say is, there really isn’t anything the Fed can say that we do not already know.
On the flip side — and something few are talking about is — the VIX closed at 11.85, down .29 or -2.39%, its lowest level since 2019. Either way, something has to give. And don’t forget, Nvidia reports today after the bell.
Our Lean
I don’t think this is a coin toss. The lower the volumes go, the easier it is to push the ES higher. As I have always said, “no one knows for sure what the ES is going to do next.” But I think basic trading rules apply — the trend is your friend and don’t forget it.
If the ES does indeed rip higher, we could keep going up into Thursday. Buy the pull backs, 5400+ is coming. As always, use stops.
MrTopStep Levels:
According to Jeff Hirsch from Almanac Trader:
“Friday before Memorial Day has become a getaway day on The Street and trading can be lackluster with light volume. Dow has been up 12 times in the last 21 years with an average gain of 0.08%. S&P has a modestly better record, with one additional advance and an average gain of 0.16%. NASDAQ has the best record on Friday, up 15 of 21 and averages a respectable 0.38% gain. Russell 2000 has the fewest advances on Friday, but a still solid 0.30% gain.
Based upon average performance Thursday has been the best day before Memorial Day with gains ranging from 0.24% from DJIA to a solid 0.46% by Russell 2000. Frequency of gains is also best on Thursdays, except for NASDAQ. Wednesday has been the softest of the three days with DJIA’s performance turning negative.”
MiM and Daily Recap
ES recap
The ES traded down to 5323.00 and opened Tuesday’s regular session at 5324.50. After the open, the ES traded 5322.50 and then slowly made five new highs: 5328.00 at 9:35, 5328.75 at 9:46, 5331.75 at 10:13, and then up to 5337.75 at 10:46. Each new high was preceded by small pullbacks. After the 5337.75 high, the ES pulled back to 5333.00 at 11:01, rallied up to a new high at 5339.25 at 11;30, pulled back under the VWAP down to 5330.00 at 11:53 and for the next hour and twenty minutes, it fell into a 5-point back-and-fill. From there, the ES traded down to 5328.00 and then shot up to 5339.75 at 3:04.
After the high, the ES made two lower highs at 5339.00 and 5338.75, pulled back to 5333.25 at 4:56 and then rallied up to another new high at 4341.75 at 3:22, pulled back to 5337.75 at 3:30 and then popped up to 5347.50 at 3:36. After the high, the ES pulled back to the 5340.50 level at 3:47 and traded 5341.25 as the 3:50 cash imbalance showed $1.2 billion to buy, rallied back up to 5347.25 and traded 5344.50 on the 4:00 cash close.
After 4:00, the ES pulled back to 5342.75 and settled at 5344.00 on the 5:00 futures close, up 12.25 points or 0.23%%, the NQ settled at 18,798.75 up 35.75 points or +0.19%. U.S. crude-oil futures fell 0.7% to $79.26 a barrel, gold pulled back 0.5%, marking the metal’s second-highest close on record and copper futures gained 0.6% to settle at $5.119 a pound Tuesday, a record close. The yield on the 10 yr note that climbed as high as 4.706% in April settled at 4.414% Tuesday, down from 4.436% on Monday.
In the end, it was a gap down and rebound. In terms of the ES’s overall tone, the ES was firm. In terms of the ES’s overall trade, volume was sluggish: Only 144k contracts traded on Globex and 805k traded on the day session for a total of 949k contracts traded.
Technical Edge
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NYSE Breadth: 47% Upside Volume
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Nasdaq Breadth: 39% Upside Volume
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Advance/Decline: 47% Advance
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VIX: ~12
Guest Post Polaris Trading Group
S&P 500 (ES)
Prior Session was Cycle Day 1: Shallow decline to this session as price held 5330 key Line in the Sand on low volatility consolidation ahead of tomorrow’s Nvidia (NVDA) earnings report. Range was 25 handles on 941k contracts exchanged
…Transition from Cycle Day 1 to Cycle Day 2
This leads us into Cycle Day 2: BIG Events today are FOMC Minutes @ 2pm and Nvidia’s (NVDA) earnings after the closing bell. Bulls remain firmly in-control as price is notching all-time highs. Volatility has been low, but could expand rapidly on reaction to either of today’s releases.
As always, our tactical trade plan remains unchanged…Stay in alignment with dominant intra-day forces.
As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 5335, initially targets 5350 – 5357 zone.
Bear Scenario: Price sustains an offer below 5335, initially targets 5325 – 5320 zone.
PVA High Edge = 5339 PVA Low Edge = 5326 Prior POC = 5333
Thanks for reading,
PTGDavid
Economic Calendar
For a more complete Economic Calendar see: https://mrtopstep.com/economic-calendar/
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!
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