The S&P Wants to Rally, but Headline Risk Remains
We get Tesla and Netflix earnings tonight.
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Our View
Positive seasonal patterns are fighting back against the Israeli invasion of Gaza. When this happens, the market’s happy face can sink fast.
Like I said yesterday, the S&P and Nasdaq hate uncertainty and that’s where we are today. And you can see the way the market (and the algos) react to the midday headlines too.
I personally think this was all thought out…let Hamas attack Israel, lure the Israelis into Gaza, bring in the Hezbollah and Iran, and draw in the United States with it. This is the risk floating around in the markets right now.
Our Lean
I did two Twitter polls:
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Will Israel’s push into Gaza bring Iran and Hezbollah into the war?
65% YES / 35% NO
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BULLISH or BEARISH?
53% BULLISH / 47% BEARISH
The poll seems contradictory. On one side you have more bulls than bears, yet you have more people saying we will go to war with Iran. A month ago when I asked if the US and Iran would go to war, there were way more people that said “no.” This is clearly a shift in sentiment.
Personally, I am somewhat surprised by the “over 50%” bullish response, but with what’s going on I guess that can change. One pattern I am looking at is a comparison of what happened after Russia invaded Ukraine.
Our Lean: We can’t deny the positive stats and how it looks like the ES wants to rally, but I also think there is sizable headline risk. There is a high level of hate and Iran can turn things upside down. I’m looking to sell the early rallies and buy the 30 to 50-point pullbacks, but we also see danger lights flashing.
PG, ASML, ABT, MS, ELV, USB, TRV, NDAQ, STT, MTB, NTRS, CFG all report before the bell. After the close we get TSLA and NFLX, among others.
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Upside: Trade and hourly closes above 4384 targets 4390, then 4396. Hourly close above 4396 targets 4412.48, then 4427, then 1 sd at 4431.82. Hourly close above there targets 4460.50, then 2 sd at 4465.89.
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(Daily/Weekly close above 4412.48 with NQ above 15541.35 Targets Much Higher).
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Downside: Trade and hourly close below 4384 targets 4366.75 and -1 sd at 4363.68. Hourly close below there targets 4339, then – 2 sd at 4329.61.
MiM and Daily Recap
ES 15-min recap
The ES sold off to 4371.75 on Globex and opened Tuesday’s regular session at 4369.25. After the open, the ES rallied up to 4378.00, traded down to a daily low of 4365.75 at 9:59, and then rallied 54 points up to 4423.25 at 12:31. From there, it sold off down to 4396.50 at 1:49 after this headline hit: MORE THAN 300 KILLED IN ISRAELI AIR STRIKE ON HOSPITAL IN GAZA – CIVIL DEFENSE CHIEF IN REMARKS TO AL JAZEERA TV.
After the low, the ES hung in a 4 to 6 point back-and-fill pattern from 4388.00 to 4396 from when the ES traded up to 4398.75 at 2:50, and then the ES dropped 11 points down to 4383.50 in 1 minute. After a small uptick and a higher low at the 4384.50 level, the ES rallied back above the VWAP up to 4397.25 at 3:31 and then traded back down to 4390.00 at 3:46. It traded 4392.50 as the 3:50 imbalance showed $1.1 billion to sell and then traded up to 4401.50 at 3:56 and traded 4402.25 on the 4:00 cash close. After 4:00, the ES traded up to 4403.25 and settled at 4400.00 on the 5:00 futures close, down 5 points or 0.15% on the day.
In the end, it was a wild, choppy day. In terms of the ES’s overall tone, it was resilient in light of how weak the Nasdaq was. In terms of the ES’s overall trade, volume was on the high side: 270k traded on Globex and 1.552 million traded on the day session for a total of 1.822 million contracts traded.
Technical Edge
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NYSE Breadth: 73% Upside Volume
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Nasdaq Breadth: 60% Upside Volume
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Advance/Decline: 60% Advance
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VIX: ~$17.75
ES
Levels from HandelStats
ES Daily
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Upside: Trade and hourly closes above 4384 targets 4390, then 4396. Hourly close above 4396 targets 4412.48, then 4427, then 1 sd at 4431.82. Hourly close above there targets 4460.50, then 2 sd at 4465.89.
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(Daily/Weekly close above 4412.48 with NQ above 15541.35 Targets Much Higher).
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Downside: Trade and hourly close below 4384 targets 4366.75 and -1 sd at 4363.68. Hourly close below there targets 4339, then – 2 sd at 4329.61.
NQ
NQ Daily
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Upside: Trade and hourly close above 15155.25 targets 15186, then 15216.75, then 4:15 settlement at 15232.75. Above there targets 15247.50, then 15274.50. Hourly close above there targets 15328, then 15376.62 and 1 sd at 15390.94.
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Hourly close above there targets 15435.50, then weekly sd at 15468.07, then 15541.35 and 2 sd at 15549.13. (Hourly/Weekly close above 15541.35 is very Bullish).
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Downside: Trade and hourly close below 15155.25 targets -1 sd at 15074.56. Hourly close below there targets 14981.25, then -2 sd at 14916.37.
Guest Post
PTG / Taylor 3 Day Cycle
Author: David D Dube (a.k.a. PTGDavid)
Website: https://polaristradinggroup.com/
Prior Session was Cycle Day 2 (CD2): Price extended this cycle’s rally fulfilling 4417 – 4422 target zone as outlined in prior DTS 10.17.23 Briefing. Prior range was 57 handles on 1.824M contracts exchanged.
…Transition from Cycle Day 2 to Cycle Day 3
This leads us into Cycle Day 3 (CD3): Markets continue to consolidate within the five-day value zone marked by 4380 – 4415 “sandbox” edges. Three-Day Cycle Targets have been fulfilled, so we will mark today as a “wild-card” for direction, given price is trading near POC (4400) and balanced. Geo-Political turmoil is always a potential market-moving variable as “tape-bombs” can occur at any moment. As such, scenarios to consider for today’s trading.
Bull Scenario: Price sustains a bid above 4405, initially targets 4420 – 4425 zone.
Bear Scenario: Price sustains an offer below 4395, initially targets 4380 – 4375 zone.
PVA High Edge = 4410 PVA Low Edge = 4383 Prior POC = 4395
*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.
For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:
Link to access full Cycle Spreadsheet > > Cycle Day 3 (CD3
Thanks for reading,
PTGDavid
Guest post
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
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JPM — Many are long from $143-145. This is a longer term swing. Trimmed $153s, then $157.50+ on 7/24.
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Down to ½ position vs. Break-even stop. Can make small, ~10% position trim if we see $160+
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If worried about a larger correction, can sell/trim north of $150. Below entry and no need to stick around in JPM.
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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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