Staying Positive Amid the Endless Negatives

Stocks due for a dip?

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Our View

Despite the sometimes bleak outlook, I actually try to maintain a positive attitude about life. Markets are what they are, and we can’t change that, but we can strive to stay upbeat. I know it’s challenging, but it’s something we all must work on, regardless of our financial situation.

Yesterday, I was talking to the PitBull about his trades, and he asked me how I was feeling after the accident. I assured him I’ll be okay and not to worry. You know what he said? “I worry about everything,” and then he offered to pay for my nose surgery.

I’m not sure if this is so much about getting older as it is about how rapidly things have changed since the COVID-19 outbreak. While life has returned to some semblance of normalcy, it’s not the old normal; it’s a new kind of normal. One where laws are enacted but not always enforced, where geopolitics and the specter of nuclear war loom daily, where the dollar’s dominance is questioned, and where national debt climbs towards $37 trillion… the list goes on.

That being said, it’s astonishing to believe that the S&P achieved its 38th record close. It’s incredible that the previously beleaguered Russell saw its 5th consecutive session of gains, rising 3.5% in a single day and outperforming the Nasdaq Composite by approximately 11% over the past five trading days — the greatest outperformance since December 2020. Additionally, it’s remarkable that the Russell has outpaced the S&P by about 10% over the same period, marking the widest five-day outperformance on record, according to Dow Jones Market Data.

MiM and Daily Recap

After selling off to 5673.00 at 4:15 on Monday, the ES did what it does best: it rebounded to 5698.75 at 9:29 on Globex and opened Tuesday’s regular session at 5698.25. After the open, the ES traded at 5696.75 and then rallied 9 points to 5705.75 at 9:40. It then sold off to 5690.25 at 10:10, followed by a 34-point rally to a new daily high at 5714.25 by 11:15. After reaching this high, the ES pulled back to a higher low at 5691.50 at 12:20, rallied to 5700.75, and made a few higher lows before reaching 5705.50. It subsequently dropped to 5694.00 at 1:35, rallied to 5703.00, pulled back to another higher low, and surged to 5715.75 at 3:05.

Following this high, the ES pulled back to 5709.75 and traded back up to 5716.50 at 3:41, closing at 5710.50 as the 3:50 cash imbalance showed $90 million to buy. It then traded up to 5721.25 at 3:56 and settled at 5718.00 by the 4:00 cash close. After 4:00, the ES sold down to 5712.50 and settled at 5715.50, up 27.25 points (+0.48%) and marking its 38th record close of the year — also a new all-time high. The NQ settled at 20,588.50, down 35.25 points (-0.17%), while the YM had its best day of the year, settling at 41,261.00, up 747 points (+1.84%) and the RTY Russell 2000 futures settled at 2,285.10, up 77.50 points (+3.51%). The 10-year U.S. Treasury note yield declined to 4.168% on Tuesday from 4.231% on Monday. MS closed up 0.90%, BofA rose 5.3%, while SCHW tumbled 10% on the day.

In the end, there was a significant rotation into the Russell and Dow. In terms of the ES’s overall tone, it was characterized by buying the dips. Overall trade volume was lower at 1.423 million contracts traded.

Technical Edge

Guest Post  — Polaris Trading

Topic: PTG Daily Trade Strategy

Author: David D Dube’ (a.k.a. PTGDavid)

Prior Session was Cycle Day 2: Normal CD2 unfolded as MATD rhythm was the main theme for this session. Returning traders from lunch decided to get aggressive and orchestrate an upside breakout in K-Period (2:30 – 3:00) which held subsequent pullbacks, to close price near highs of the day. Range was 48 handles on 1.419M contracts exchanged.

 …Transition from Cycle Day 2 to Cycle Day 3 

This leads us into Cycle Day 3:  Primary Three-Day Cycle Target (5708) has been fulfilled so with bulls remaining firmly in-control we’ll mark today as a “wild-card.” Dow Jones (YM) was higher in excess of 700 points yesterday, while NAZ (NQ) seems to be the fly in the ointment, uncharacteristically. (see more on NQ below).

You Know The Plan! Our discipline of maintaining positioning that is aligned with market forces continues to serve us well, so stay the course.

As such, scenarios to consider for today’s trading.

BullScenario: Price sustains a bid above 5708, initially targets 5720 – 5730 zone. 

BearScenario: Price sustains an offer below 5708, initially targets 5695 – 5690 zone.

PVA High Edge = 5707      PVA Low Edge = 5690         Prior POC = 5699

*****The 3 Day Cycle has a 91.30% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history. 

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!