This Is a Hit-and-Run Market Right Now
End of month is approaching
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Our View
I expected it to be a low-volume grind and it exceeded my expectations. The ES traded 1.22 million contracts yesterday, its lowest volume day since August 1st — barely — when it traded 1.21 million contracts.
Yes, there were some good rips and dips, but it felt like no one was trading. The bots just ping-ponged it back and forth between 4425 and 4445. While low volume tends to favor the upside, it makes it easy for the programs to run amok and that’s exactly what they did. There were several times when the ES would rally 10 or 15 points and then drop 10 or 15 points out of nowhere.
Like I said in yesterday’s Our Lean section, I’m not sure if the ES is going back down or if it’s trying to establish a trading range.
I’m going to keep today’s OP short. We are going into the end of a bad month for the index markets and tomorrow I will add the Stock Trader Almanac’s stats for September.
Our Lean
I think this is a hit-and-run market.
We all know what the problems are, but the PPT — the Plunge Protection Team — just keeps kicking the can down the road.
If I had a gun to my head, I would say last Friday’s low was it and that the ES is going back up to 4480, 4500, and then 4550 — but that’s getting ahead of myself.
Our Lean is the same as yesterday: Sell the early rallies and buy the pullbacks. Let’s see if it works like a charm — again.
MiM and Daily Recap
ES 15-min
The ES traded up to 4438.50 on Globex and opened Monday’s regular session at 4437.75. After the open, the ES traded up to 4447.25, sold off down to the VWAP at 4432.75 at 9:53, back-and-filled from the 4443 area down to the 4437 area until 10:18, rallied up to a lower high at 4447.25 at 10:31 and then traded down to 4426.75 at 11:08. The ES did another round of back-and-fill between 4427.50 and 4434.50, then double-bottomed at the 4423.75 level at 11:52. From there, the ES traded up to a new high by 2 ticks at 4447.75 at 1:07 and then sold off all the way back down to 4423.50 at 1:58.
The ES rallied up to 4438.75 at 3:11 as the early imbalance showed $115 million to sell. The ES traded at 4441.50 as the 3:50 cash imbalance showed $278 million to sell, traded down to 4438.50, and traded 4443 on the 4:00 cash close. After 4:00, the ES traded sideways and settled at 4444.25 on the 5:00 futures close, up 28 points or 0.63% on the day.
In the end, it was a two-way trade with a bias to the upside. In terms of the ES’s overall tone, it was firm but also subject to downside raids. In terms of the ES’s overall trade, volume was low: Only 164k ES traded on Globex and 1.056 million contracts traded on the day session for a grand total of 1.22 million — 680k lower than Friday’s 1.9 million contracts.
Technical Edge
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NYSE Breadth: 79% Upside Volume
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Nasdaq Breadth: 58% Upside Volume
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Advance/Decline: 74% Advance
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VIX: ~$15
S&P 500 — ES Futures
4410 to 4415 is the 50% retrace from Friday’s low to today’s Globex high. It’s also yesterday’s low.
ES Daily
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Upside Levels: 4455-60, 4470, 4486-94
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Downside levels: 4410-14, 4440, 4384, 4365, 4350
NQ
The 61.8% and 21-day acting as resistance during Globex.
NQ Daily
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Upside Levels: 15,160, 15,275-300, 15,420
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Downside levels: 14,950-975, 14,900, 14,840, 14,750, 14,600-610
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.
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM, AMZN, CVS, AMD, TLT and YM.
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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 and look to re-establish lower (if we get it).
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XOM — Long from the monthly-up area at $108.50 — First ¼ or ⅓ trim is ~$112.50. Stops at $104.
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CRM — long from ~$200 — Trimmed at $207, $209+ and $210. Now down to runners as we trimmed $213-$215 ahead of earnings
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Earnings in two days!! Exit if you want no exposure.
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Go-To Watchlist
Feel free to build your own trades off these relative strength leaders
Relative strength leaders →
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LLY
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Energy stocks — VLO, SLB, EOG
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AI stocks — NVDA, ADBE
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Mega cap tech — GOOGL, AMZN
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Select retail — ELF, LULU, COST
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BRK.B (recent new all-time highs)
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CAT
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RCL
Relative weakness leaders →
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DIS
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PYPL
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NKE (FL, DKS and China are killing this name).
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EL, FL, DG
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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