Thin-to-Win Powered Monday Gains
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Our View
Stock indices followed through on their rally Monday after last week’s not-too-hot jobs report boosted hopes of an interest-rate cut this year.
As of yesterday’s 5207.75 high, the ES has rallied 171.75 points off this 5036.00 low (from last Thursday). That’s a gain of 57.25 points per day. It amazes me how easy it is to flip the switch, but how long will it last? According to Jeff Hirsch from the Almanac Trader, his recent insights may hold a few clues:
“Over the last 21 years, the first three days of May have historically traded higher, and the S&P 500 has been up 18 of the last 26 first trading days of May. Bouts of weakness often appear around or on the fourth, sixth/seventh, and twelfth trading days of the month while the last four or five trading days have generally enjoyed respectable gains on average, but the last day of May has weakened noticeably with only NASDAQ gaining ground.”
That is only part of the article. For the full breakdown, check out the link above.
I remember how Mays being like this. I also know June can be rough.
Our Lean
I didn’t notice how low the Globex volume was yesterday. Had I, my lean would have strictly been to buy the pullbacks. As I said, 5200 was on TAP.
Today is a new day.
Minneapolis Fed President Kashkari speaks at 11:00, and consumer credit is at 3:00, so not much is going on in the way of the ES going higher. Additionally, volume should pick up as it was only ~1 million contracts traded on Monday.
Our lean: The 5215-5220 zone is a big area, and above that, 5138 and 5145-5250 come into play. I don’t think we will go blasting up there right away, but I’ll also be looking to see how the 5190 area acts and below that the 5183-5185.85 zone — or any 30 to 40-point pullback.
Disney reported before the bell, while some growth faves like Palantir and Celsius are under pressure.
MrTopStep Levels:
MiM and Daily Recap
ES recap
The ES rallied up to 5177.50 just before the open and traded at 5179.50 on Monday’s regular session open. After the open, the ES traded down to 5174.00 and slowly rallied up to 5187.75 at 9:44. Then it slowly traded back to the VWAP at 5178.25 at 12:45. After the pullback, the ES traded up to 5191.00 at 1:05, pulled back to 5183.50 at 1:21, made a new high at 5194.00, pulled back to 5190.75 and then traded up to 5199.50 at 2:27.
After the high, the ES pulled back to 5190 at 3:19 and traded 5198.25 as the 3:50 cash imbalance showed ~$800 million to buy, rallied up to 5205.50 at 3:56 and traded 5207.00 on the 4:00 cash close. After 4:00, the ES traded in a 3 to 5-point range and settled at 5204.00 on the 5:00 futures close, up 51.75 points or 1%, while the NQ settled at 18,178.75, up 194.37 points or 1.04% on the day.
In the end, London’s bank holiday created a very thin-to-win trading environment. In terms of the ES’s overall tone, the ES was firm all day. In terms of the ES’s overall trade, volume was extremely low: Only 140k ES traded on Globex and 822k traded on the day session, for a total of 962k contracts traded.
Technical Edge
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NYSE Breadth: 77% Upside Volume
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Nasdaq Breadth: 64% Upside Volume
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Advance/Decline: 77% Advance
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VIX: ~13.50
ES
ES Daily
Guest Post — Niels from Tradrr
Slow week when compared to the week prior with nothing to target in regards to earnings impacting the current bounce being seen for equities. When considering the treasuries we have scheduled a few Fed speakers through the week with some events later today through the lunch time doldrums for the 3 year notes, Wednesday for the 10 year notes followed by Thursday ones regarding the 30 year bonds totaled for an auction of $125 billion. The topic for the week should surround comments regarding inflation and their effects on potentially cutting rates sometime in the year.
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Following the policy announcement on March 20th from which Powell reiterated comments indicating the Fed required more evidence of inflation moving towards 2% target before consideration of cutting rates sparked a hawkish assumption out of the Fed keeping the Low volume node formed in section 1 defended and sparking a breakdown into the month of April.
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Starting the 2nd week of April off with an expectation for the Fed to have a Hawkish stance coming off a hot CPI report continued the current downward trajectory for the 10 year note futures into the month of May leaving behind a Low volume node that is currently being tested as of the start of this week.
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The majority of 2024 have pointed for the Fed to take a more hawkish stance left the market open to a surprise as Powell stated it unlikely for the next policy rate to be a hike and that the current rate environment needs more time to work itself out whilst keeping rate cuts seemingly on the table. This latest meeting has place the 10 year notes in a potential bottoming state giving the month of May an opportunity to fill back in the Low volume nodes left behind the 2 months prior.
For more from Niels at Tradrr, please check out this link.
Economic Calendar
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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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