on April 26, 2024

There’s Give and Take…and The Bulls Are Taking

GOOGL and MSFT earnings drive upside

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Our View

It really doesn’t matter what we think or what the charts say. What happens when the ES and NQ selloff like they did yesterday morning and then gap lower?

Does it mean that the markets are weak or are the markets just following the downtrend?

I think it’s both — but the BOTs have a lot to do with deciding when too many people get too short. Meaning once everyone comes piling in and the indices sell off, the algos 1) know when all the selling has dried up and 2) that traders who sold at low prices put in stops and the algos start searching for stops on the upside.

It’s Going To Be Like This For A Long Time

I am not proud of it, but my $10 million hit in the FLASH CRASH allows me to say I’m an authority on what I call “irregular movement” and yesterday had a high level of it. Here are just two examples:

The ES made its early low at 5022.25 at 10:05 and rallied up to 5132.75 — a 110.75-point rally in 6 hours. At 2:55 ET the ES made a low at 5064.50, a 68.50-point move off that high. At 3:45 the ES made another low at 5074.50 and traded 5137.75 at 4:10, a 63.25 point rally in 25 minutes.

The NQ made an early low at 17,308.25, which was down 199 points from Wednesday’s settlement, and after the late push-up, the NQ rallied all the way up to 17,827 a 518.75-point rally. At 3:51 the NQ traded 17,534.50 and at 4:05:53 the NQ traded 17,818.25 a 283.75 points rip in 15 minutes. Look at the time of this post in the MTS chat, at 3:56 the NQ traded 17.540.25

IMPRO : Dboy : (3:56:20 PM) : Blue Horseshoe likes a rip in the NQ

This is big stuff because the low fell on the PitBull’s Thursday before the Friday expiration and… there are only 3 sessions left in April.

Our Lean

The PCE number should be a market-moving event and GOOGL and MSFT’s earnings are driving stocks higher. I was 100% right about buying the gap down, but while you could have sold a few of the rips, it was all about catching people offside going into the GOOG and the MSFT earnings. Other than the open and the early drop it was a one-sided affair.

Our Lean: As I said, I don’t think we are going straight back up to new highs but there has to be some give and take and right now the Bulls are taking. With the ES rallying over 100 points from its low and closing out at a big premium to the S&P cash, our lean is to sell the early rallies and buy the pullbacks. While the rally did squeeze out a lot of shorts, I think there will be a lot more to squeeze out today.

MrTopStep Levels:

How to use MTS levels

MiM and Daily Recap

ES recap

The ES traded down to 5034.25 and opened Thursday’s regular session at 5039.25 after GDP growth slowed to 1.6% in the first quarter, below expectations. After the open the ES traded up to 5041.25, dropped down to 5031.00 at 9:40, rallied up to a lower high at 4041.25 and then sold off down to 5022.25 at 10:05. A few minutes after the low I posted this in the MTS chat:

IMPRO : Dboy : (10:08:06 AM) : rip coming

And the ES rallied up to 5044.25 at 10:20. After the rally, the ES sold off down to a higher low at 5028.50 at 10:55 and then traded back up to the 5040.50 level at 11:15, then ES rallied up to 5056.00 at 12:10. The ES pulled back to the 5046.50 level then rallied up to 5062.75 at 12:30 as the VIX started to melt. After the high, the ES pulled back to the 5056.50 level at 1:57, rallied up to the 5071.50 at 2:05, and then dropped down to 5057.25 at 3:25.

After the low, the ES rallied up to 5078.00 at 3:35, pulled back to the 5073.25, rallied up to a new high at 5066.50 at 2:55, pulled back to 5078.75 at 3:15 and then rallied up to 5090.75 at 3:25 and then sold off down to 5074.50 at 3:45. The ES traded 5076.50 as the 3:50 cash imbalance showed $1.65 billion to sell and rallied up to 5083.00 at 3:58 and traded 5072.00 on the 4:00 cash close. After 4:00 the ES rallied up 5131.75 after Google and Microsoft had blowout earnings, 100k ES traded from 4:00 to 4:15 and settled at 5131.75, 51 points or up about 1% on the day.

In the end, we all know that a selloff would eventually come, part of it is the length of the rally and the Mag 7 digesting the idea of high rates for longer. In terms of the overall tone, like I said in yesterday’s lean, there will be selloffs and rallies. In terms of the ES’s overall trade, volume was steady until the cash close and thereafter: 374k traded on Globex and 1.469 million traded on the day session for a total of 1.844 million contracts traded.