Volatility continues to fall. No October/election panic yet.

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Our View

Do you know why the ES rallies so much late in the day? Yes, yesterday’s low was 5801, which was at HandelStats downside two standard deviations, but the other part was all the buying planned for the close. The algos go from running sell stops and sell programs until the cash starts firming, the offers shrink, and the bids increase. All the weak shorts who sold at low prices start to cover, and the bots run with it. Is the decline over? I don’t think so. The ES just traded up to 5852.50, which is 51.50 points off the low and only 22.25 points off yesterday’s day session high of 5874.75.

MiM and Daily Recap

The ES made a high at 5893.75 and then sold off to 5868.25 at 9:23 am, opening Wednesday’s regular session at 5870.25. After the open, the ES traded up to 5874.75 at 9:31, sold off 16.75 points down to 5858.00, rallied 16.25 points up to a lower high of 5874.00, then sold off 29.25 points down to 5845.00 at 11:33. It rallied 11.5 points to 5856.50 and then sold off 23 points down to 5833.50 at 12:36. After the drop, the ES rallied 12.25 points to 5845.75 and then sold off 44.75 points down to 5801.00, which was the Gamma 2 level. After the low, the ES rallied 28.75 points to 5829.75, pulled back 5.5 points to 5824.25, and then rallied 8.75 points to 5839.00 at 3:48. It traded 5838.25 as the 3:50 NYSE cash imbalance showed $1 billion to buy, and traded 5837.25 on the 4:00 cash close. After 4:00, the ES traded up to 5847.00 at 4:37, then drifted back down to the 5842 area and settled at 5837.75, down 54.75 points or -0.94%, while the NQ settled at 20,220.50, down 321.50 points or -1.6%. The RTY closed down 0.96% and the YM (Dow futures) closed down 1.14%.

In the end, it was a downside rout with a big late-day bounce. In terms of the ES’s overall tone, the NQ overpowered all the indices on the way down. In terms of the ES’s overall trade, volume picked up but was still not what I would expect for such a large range, with 1.4 million contracts traded.

How to read the MIM

Technical Edge

Fair Values for Oct-24-2024 are as follows, SP: 37.86 NQ: 145.42 Dow: 224.49

Daily Market Recap 📊

Weekly Market Recap 📈

Guest Posts:

Dan @ GTC Traders

Getting Flat

We are taking a small break this week from our discussions of Moral Hazards for a simple look at how we have been approaching trading as of late. On Wednesday, the market fell by over 90 points. We have rallied back to our previous 5866 structure …

Regardless of the outcome at the 5868 structure at the time of this writing? We have actually been working at ‘getting flat’ as the United States Election Day approaches. As we have outlined in previous articles; one way to deal with an increase in volatility? Is simply to step aside. ‘Get Flat’. And that has been what we have been doing. While we do maintain our Equity Fixed Income ‘Core’ positions? We have not yet breached a price structure where we would consider hedging those 13 positions. In fact, if we breach below 5800, our quantitative trigger would still not be breached for us to hedge via measuring our beta weighted deltas; nor looking for shorts in our Valuation Long-Short book. However … for short term trading? In front of the election, we are simply taking the profits we have made this month, and flattening out. As we have been bearish on price and bullish on yield for some time now, we do still have a TLT Call spread we have sold …

But beyond that position and some short dated 4 week Treasury Bills that we have? We have simply been getting flat as we approach November 4th. It ain’t sexy, but it works. Until next time, stay safe … and trade well.
But until that time, stay safe and trade well.

PTG Trading Room Summary – October 16, 2023

The trading day on October 23, 2024, in the PTG room was filled with opportunities and insights. The session began with a focus on the Crude Oil Open Range Breakout, where the first target (TGT 1) was filled early on, signaling a positive start. Shortly after, the NQ market (Nasdaq futures) saw some action with an Open Range Short (SS) at 20405.50, and both CL (Crude Oil) and NQ targets were met (TGT 2 and TGT 1, respectively).

The room kept a close eye on price movements, with David highlighting key levels, such as the fulfillment of the lower target zones (TZ) and the potential “Whiplash” move off a test of the prior low, encouraging traders to stay alert for reversals. David also pointed out the significant rejection of price at the Open Range Midpoint, leading to another test of the lows and ultimately the fulfillment of the 5850 target on NQ.

As midday approached, the lower Money Box Target was fulfilled, marking a natural pause during lunchtime. The market remained in bear territory, and David reinforced that the bulls needed to reclaim specific zones for any chance of a reversal.

By the end of the day, NQ’s Open Range Short met all targets, and the much-anticipated directional breakout of the composite range finally occurred. The session concluded with significant declines across major indices (ES down 0.91% and NAZ down 1.53%). David noted that the day aligned with a “Normal Cycle Day 1,” making it a good opportunity for those positioned for cycle call buys, with symmetry achieved in price movements.

Key lessons from the day included the importance of monitoring price reclaims, being patient for breakout confirmations, and recognizing when a market is in control (as demonstrated by the bearish tone throughout). Overall, it was a rewarding day for traders who capitalized on short opportunities and range expansions.

DTG Room Preview – October 24, 2024

Technical levels for S&P (ES) futures: Resistance at 5942/47, Support at 5754/57, and 5730/35..

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!