“The Fix Is In” Ahead of the CPI

Low-volume grind favors the bulls

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Our View

I’m going to keep this light: the ES has closed higher for its 36th record close. 

What I think is, the markets are smelling out a rate cut — the $5.5 billion to buy on Monday, Powell saying the Fed is inching closer to a rate cut, and BofA seeing the 5th largest week of equity inflows in their data history since 2008. 

Last week — during which the S&P 500 was +2.0% — BofA Securities clients were net buyers of US equities for the first time in three weeks (+$6.1B; 5th largest in history). Clients bought both single stocks and ETFs; single-stock inflows were the largest in their data history (since ’08). 

This will be followed up by a lower than expected CPI number in my opinion…The fix is in!

MiM and Daily Recap

The ES traded up to 5640.00 on Globex and opened Tuesday’s regular session at 5636.00. After the open, the ES traded 5634.25, rallied up to 5642.75 — from the low to the high, 85k ES traded. After the high, the ES sold off down to 5630.00 at 10:28 and then traded right back up to the high at 5642.75 at 10:48, sold off down to a higher low by 3 ticks at 5630.75 at 11:30, rallied back up to a lower high at 5641.75 at 12:20, sold off down to a higher low at 5634.75 and then ripped up to a new high at 5645.75 at 1:05. 

From there, the ES pulled back to 5642.25, rallied up to a 5645.25 lower high and out of nowhere a big sell program hit that pushed the ES lower and in just minutes it sold off down to 5631.00. As I said in the MrTopStep room, that sell program changed to tone. After the selloff, the ES hovered at the VWAP at 5637.00 and then sold off down to 5629.50 at 2:34. After the drop, the ES rallied back up to 5635.25 at 2:50 and then sold off down to a new low at 5628.25 at 3:34. 

After the low, the ES traded up to 5633.25 at 3:44 and then dropped down to 5630.00 at 3:48. The ES traded 5632.25 as the 3:50 cash imbalance showed $700 million to sell, rallied up to 5634.00 and then dropped down to 5628.75 at 3:56 and traded 5631.00 on the 4:00 cash close. After 4:00, the ES rallied up to 5633.75 and settled at 5632.00, up 6.75 points or 0.12%. The NQ settled at 20,687.75, down 14.75 points or -0.07%. The yield on the 10-year notes ended Tuesday at 4.297%, up from 4.267% on Monday.

In the end, the futures may have been moving but there was very low volume. In terms of the ES’s overall tone, it was a two-sided trade. In terms of the ES’s overall trade, it was really low until the late selloff: 127k ES and 874k traded on the day session for a total of 1.001 million contracts traded.

Technical Edge

Guest Post — Polaris Trading

Topic: PTG Daily Trade Strategy

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

Website: https://polaristradinggroup.com/

Prior Session was Cycle Day 3: Positive Three-Day Cycle was fulfilled with a 91.11% success-rate covering twelve-plus years of tracking history. Price held bid above our LIS (5625) and fulfilled initial upside target (5640), but failed to expand higher with a sustained bid, although price did notch a marginal new ATH. Hence, it was a slow summer day of consolidating recent gains. Range was 19 handles on 1010M contracts exchanged.

 …Transition from Cycle Day 3 to Cycle Day 1 

This leads us into Cycle Day 1: Today begins a new cycle so we should be anticipating a decline, but price would need to break down through 5630 with sustained offers to increase odds of a deeper decline.  

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.

Bull Scenario: Price sustains a bid above 5630, initially targets 5640 – 5645 zone. 

Bear Scenario: Price sustains an offer below 5630, initially targets 5615 – 5610 zone.

PVA High Edge = 5639      PVA Low Edge = 5631         Prior POC = 5634

*****The 3 Day Cycle has a 91.11% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history. 

Thanks for reading,

PTGDavid

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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!