S&P 500 : Choppy and Weak in front of Today’s Consumer Price Index

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Our View

While President Trump is choosing his cabinet, tensions are boiling over in Ukraine. Although some may see it as bluster, the involvement of North Korean soldiers marks the widening of the conflict. As I noted before, the timing couldn’t be better for expansion by the so-called “Axis of Evil,” right into a U.S. presidential election. Russia is effectively China’s puppet, with both working in coordination with Iran and North Korea. Everything appears meticulously planned, and I think tensions will only heighten. This doesn’t even account for the Middle East, where Israel is fighting on three fronts, or the multiple conflicts in the South China Sea, which China claims to own 90% of.

Here’s a Wall Street Journal article, “U.S. Shrugs as World War III Approaches,” which provides a bipartisan view on growing threats and perceived American weakness: U.S. Shrugs as World War III Approaches. I’ve been warning of these rising threats for over two years, and they seem only to be escalating. After supplying arms to Ukraine and Israel, there’s no doubt U.S. arms stockpiles are at historic lows. I don’t know how this will end, but the trajectory toward war appears to be intensifying daily.

MiM and Daily Recap

The ES rallied to 6032.50 on Globex, sold off to 6012.25, and opened Tuesday’s regular session at 6030.00. It traded up to 6036.50 at 9:39 before selling off 32.75 points to 5986.75 at 1:03. After hitting the low, the ES rallied 41 points up to 6027.75 at 2:45, then dropped 11.75 points to 6012.75 at 3:36, followed by a rally of 6.25 points up to 6019.00. The ES then sold off to 6012.25 and traded at 6016.75 as the 3:50 cash imbalance showed $1.1 billion to buy. It then sold off to 6008.75 at 3:57 and traded at 6012.75 on the 4:00 cash close. After 4:00, the ES traded down to 6011.75 and settled at 6012.25, down 16.25 points or -0.27%.

The NQ settled at 21,178.00, down 32.25 points or -0.15%, while Bitcoin closed up 2.8% to $89,525, a new all-time high. The yield on the 10-year note rose to 4.43%.

If you asked me whether I was surprised by the drops, I’d point you to MrTopStep’s Opening Print lean, where I mentioned I couldn’t rule out selling a rally but wanted to buy any 50- to 80-point pullbacks. The ES fell 50.25 points from its high to its low. While it wasn’t exact, I figured lower volumes would lead to BOTs stirring the market. In terms of the ES’s tone, it behaved as expected—tired and overextended. Overall trade volume was higher, with 1.327 million contracts traded.

Technical Edge

Fair Values for November 13, 2024:

Daily Market Recap 📊

Weekly Market  📈

VIX: ~15.19 (down)

Guest Posts

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Jeff Hirsch @AlmanacTrader

November Monthly Option Expiration Day: Russell 2000 Best

Russell 2000 (the small-cap index) has been up 16 of the last 21 years on November’s monthly option expiration Friday with an average gain of 0.48% in all years. Since 2012 Russell 2000 has been even more consistent, up 13 of 14. DJIA has been second best on November’s monthly option expiration Friday with an average gain of 0.42% and up 15 of the last 21 years. It is not a mistake that DJIA’s November monthly op-ex day has the same point change and percent change in 2014 and 2015. It was triple checked and it’s correct.

Full-week performance has been historically weaker. Average performance for the week is negative across the board with losses ranging from –0.32% by Russell 2000 to –0.18% from DJIA. Week after performance has been better, with NASDAQ and Russell 2000 strongest.

Room Summaries

Polaris Trading Group Summary – Tuesday, November 12, 2024

On Tuesday, November 12, the trading day opened with PTGDavid identifying key levels and scenarios. The initial focus was on the 6025 level as the “Line in the Sand” (LIS), marking a consolidation zone with significant resistance at 6035. The market opened neutral and range-bound, constrained by positive gamma, which limited price expansion.

PTGDavid initiated an early long probe with a successful tag of the 6035 target but noted that buying volume diminished, trapping long positions and pushing prices back to the 6025 LIS. After an attempted reversal, aggressive selling emerged, leading to a short-side shift, though this initial attempt resulted in stopped-out trades and a challenging “choppy” range-bound environment.

Mid-morning, patience on shorts paid off as sellers took control, leading to a break below 6025 and fulfilling the lower target of 6010. A further downward push reached 6006–6004, aligning with pre-set downside targets. The session exhibited “trappy” behavior, with PTGDavid encouraging flexibility in this challenging range.

After a lunch break, the market reversed, with buyers re-entering and driving prices back toward the LIS at 6025. PTGDavid noted the shift as a potential end-of-cycle long opportunity, which played out with strong buy-side momentum leading into the close. A notable Market-on-Close (MOC) buy imbalance of $1.1 billion indicated strong buyer interest into the end of the session.

The day underscored the importance of flexibility and patience in choppy, range-bound conditions, along with the value of capitalizing on reversal plays at key levels.

Discovery Trading Group Room Preview – November 13, 2024

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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!