Stocks Are Acting a Bit Tired
3 Fed speaker and a bond auction
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Our View
It’s only May 8th and it feels like the dog days of summer, which typically signals a slowdown in market activity. It’s unclear whether this is due to people cutting back or just holding positions.
According to FactSet, the majority of companies have so far been beating forecasts for earnings, but they’re not getting as big a boost to their stock prices afterward as they usually do, and companies that fall short of profit expectations have seen their stock prices sink by more the following day than they have historically. Either way, the last two sessions have seen very narrow ranges and extremely low volumes.
Our Lean
The only economic release today is Wholesale Inventories and three Fed speakers. There’s also earnings from Shopify, Uber, Arm, Robinhood and Airbnb, and a 10-year bond auction at 1pm ET.
When the markets slow and volumes dry up, it usually means the ES and NQ are going up.
Our Lean: I think Yesterday’s late-day weak price action could lead to lower prices today. When April is a down month for stocks, it is generally followed by a weak May (see below). After a 170 point rally, it could be time to wash out some weak longs. That said, I can’t rule out buying some early weakness.
This chart is from Almanac Trader, highlighting the seasonality of how mixed the markets can be after a down April. I highly suggest reading the full post.
Overall, HandelStats said he thinks the ES is going a lot higher and if the ES closes above 5267 the futures could be off to the races and he mentioned ES 5400.
Here are some of the levels I am watching:
Upside: 5222 to 5226, 5238, 5242.50, 5248 to 5250, 5256.50, 5260, 5269, 5274, 5277, and 5284.
Downside: 5205 to 5202, 5187, 5173, 5165, 5155, 5147.50 and 5127.
MrTopStep Levels:
MiM and Daily Recap
ES Recap
The ES traded up to 5217.25 on Globex and traded 5216.25 at the open. After the open, the ES traded up to 5220.25 at 9:36, pulled back to 5210.50 at 10:02, and then rallied up to a 5224.00 double top at 12:15, traded back down to the VWAP at 5216.50 at 12:57 and then rallied up to the high of the day at 5126.75 at 1:35.
After the high, the ES pulled back to the 5211.75 level at 1:35, rallied up to a lower high at 5218.25 and then slowly sold off down to 5205.50 at 2:37. And then it went the other way, slowly rallying up to 5215.00 at 3:49 and the ES traded 5215.00 as the 3:50 cash imbalance showed $3.2 billion to buy and traded up to 5219.50 at 3:53 and then quickly sold off down to 5211.50 at 3:55. From there it rallied back up to 5217.25 and traded 5212.50 on the 4:00 cash close.
After 4:00, the ES traded back up to 5215.75 and settled at 5212.00, up 5.5 points or +0.11%, and the NQ settled at 18,197.75, up 2.25 points or +0.01%. The 10-year yield fell for a fifth straight session, settling at 4.46%, the yen weakened against the dollar, and crude futures settled just a bit lower at $78.38 a barrel.
In the end, the volume churned, but the range remained narrow. In terms of the ES’s overall tone, the ES and NQ acted firm but tired. In terms of the ES’s overall trade, volume was low: 162k traded on Globex, and 910k traded on the day session for a total of 1.072 million contracts traded.
Technical Edge
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NYSE Breadth: 49% Upside Volume
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Nasdaq Breadth: 51% Upside Volume
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Advance/Decline: 55% Advance
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VIX: ~13.50
Guest Post — Polaris Trading
Topic: PTG/Taylor 3 Day Cycle
Author: David D Dube’ (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 3: This cycle completed its upward trek by fulfilling CD3 Penetration Levels followed by MATD ‘back n fill’ consolidation rhythms. Textbook 3 Day Cycle. Range was 24 handles on 1.064M contracts exchanged.
…Transition from Cycle Day 3 to Cycle Day 1
This leads us into Cycle Day 1: Normal for Cycle Day 1 would be for a decline measuring 5192 (RECAP), with a deeper decline measuring 5165 (RECAPMA). Bulls continue to maintain control above 5200 handle. Break below this level targets levels noted above. Break above the 5225 opens the skylight to push to the 5240 – 5245 zone. 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 5215, initially targets 5225 – 5230 zone.
Bear Scenario: Price sustains an offer below 5215, initially targets 5205 – 5200 zone.
PVA High Edge = 5220 PVA Low Edge = 5208 Prior POC = 5215
*****The 3 Day Cycle has a 90% 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!
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