on March 7, 2024

Volatility, Volume Picks Up as Markets Gyrate

Looking for a possible Thursday/Friday low

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Our View

On the list of volatile things to trade, the S&P and Nasdaq futures have always been near the top. But now the Magnificent 7 and the millions of options that trade every day are adding an entirely new dimension of volatility. I have to ask you a question: Do you have any anxieties due to what’s going on in the world and the US economy? I do because it’s become almost impossible to plan out the next 10 years. Can the markets just keep going up and up with no fear?

One thing we do not need to fear is the Fed rate cuts, which have been put off till later in the year — if at all. Powell said rate cuts won’t be warranted until officials have “gained greater confidence that inflation is moving sustainably lower.” The bottom line is, the Fed isn’t doing anything to reduce the debt loads.

Today, the Fed uses its tools to control the supply of money to help stabilize the economy. When the economy is slumping, the Fed increases the supply of money to spur growth. Conversely, when inflation is threatening, the Fed reduces the risk by shrinking the supply. It’s another negative that the markets are totally overlooking, but that doesn’t matter either.

Our Lean

I think this is a good time to remind you that these are not our father’s markets or charts. Gold settled at 2,156.50, +14.60 or 0.68%, oil settled at $79.12, up .97 cents or 1.24%, Bitcoin settled at 67,135, up 4710 or 7.55%, the 10 Yr Note settled at 111’160, up 0’065 or .18% — everything is moving. Today is day two for Powell. Usually there is a lower tone, but who knows?

Our Lean: That was some very off-the-hook ES price action yesterday. Big and small buy programs into big and small sell programs. I think the headline news algos were going nuts with all the Fed headlines. I would have to look back but I think the volume was the highest in a few months.

I expect more of the same today. If the ES opens lower, I would look to be a buyer or buy the early pullbacks and if the ES gaps higher I would sell the open and then buy the pullbacks. Lastly, I’m still looking for the PitBull Thursday / Friday low the week before the March triple witching.

Mr. Top Step Levels:

MiM and Daily Recap

The ES took out yesterday’s high and traded up to 5117.25 on Globex and opened Wednesday’s regular session at 5119.25. After the open, the ES rallied up to 5122.25 and then sold off down to 5097.75 at 10:08. After the drop it rallied up to 5111.50 at 10:24, pulled back to the 5103.75 level and then rallied up to 5113.75 at 10:36. The ES again pulled back to the vwap at 5107.75 and it was that low that set off a 27.25 point rally up to 5134.50 at 12:34.

After the high, the ES pulled back to the 5124.25 level, rallied up to a lower high at 5133.50 at 1:32 and then sold off 20.25 points down to 5113.25. It then rallied back up to another lower high at 5121.50, sold off down to 5108.25 and then rallied back up to 5126.00. After the high, the ES sold off down to 5105.00. I warned about the uptick in volatility on Friday and today was extreme. After the low, the ES rallied up to 5117.50, slowly down-ticked to 5106.25 at 2:05, popped back up to 5118.00 at 2:07, and then pulled down to a new low at 5098.00 at 2:16. Next, the ES rallied up to 5117.75 and after the high, I posted this in the MrTopStep chat:

IMPRO : Dboy : (2:46:54 PM) : somethings smell rotten in Denmark

The ES back and filled under the vwap for the next 20 minutes and then dropped down to 5102.00, rallied up to 5112.50 and then dropped down to 5099.25 at 3:23 and that when I posted this:

IMPRO : Dboy : (3:38:41 PM) : I think they screw the shorts on the close

After that, the ES rallied up to 5116.50. The ES traded 5109.25 and the 3:50 cash imbalance showed $1.3 billion to sell and traded down to 5105.50 and traded 5112.00 the 4:00 cash close. After 4:00 the ES traded the ES drifted up a few points and settled at 51 13.25, up 22 points or 0.43% on the day. The NQ settled at 18,040.75, up 56.75 points or 0.32%.

In the end, there was a lack of buy and sell programs on Tuesday and there were non-stop buy and sell programs yesterday. In terms of the ES’s overall tone, it acted firm. In terms of the ES’s overall trade, volume was high: 277k traded on Globex and 1.6 million traded on the day session for a total of 1.877 million contracts traded.