on May 3, 2024

Welcome to Jobs Friday

A look back at life on the floor

Follow @MrTopStep on Twitter and please share if you find our work valuable.

Looking Back

Reflecting on my life, there are moments I’d revisit if possible… and yet, life allows no rehearsals. Daily resilience and determination are crucial, especially when supporting a family. During my youth, I balanced lively social outings with a steadfast dedication to my work on the CME trading floor. Despite the camaraderie, the integrity of the exchange was often compromised by a tight-knit group that controlled much of its operations. My career involved extensive travel and high-stakes dealings in New York, managed independently against formidable rivals. In one notable incident during a call with the Union Bank of Switzerland, an exchange member punched me three times in the face, another illustration of the ruthless environment of the floor.

I could have engaged in the prevalent corrupt practices, which might have eased my compliance struggles and fines, as those controlling the floor also manipulated regulatory frameworks. These individuals ran brokerage groups that dominated 75% of all transactions, fiercely protecting their domain. I might have earned millions over my 34 years there through deals with them, but I chose integrity over complicity.

Not all were corrupt; a small minority, including myself, maintained our ethics, quietly acknowledging the issues without confrontation. We chose to keep a clean conscience, despite facing numerous threats and acts of intimidation.

After I left, a new wave of corruption emerged from another group of insiders, now likely heading to court — this is shaping up to be a courtroom drama not to be missed. As the traditional open outcry trading floors at the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) were replaced by electronic pits, members retained core trading rights to both platforms.

However, these transitions significantly devalued membership seats and trading rights, exposing deep-seated corruption within the CME Group. The Board exploited the digital shift by diverting value from Class B to Class A shareholders, notably through the establishment of the Aurora Data Center (ADC) in 2012. Without Class B shareholder approval, CMEG granted access to the ADC for a co-location fee, violating established Core Rights and depriving Class B shareholders of their expected benefits. This has led to litigation, with courts recognizing potential breaches of members’ exclusive rights.

The lawsuit can be found here.

Our View

With the Fed and AAPL behind us, the focus now shifts to the jobs report, which is due up Friday morning. That will come alongside the week-one options expiration. Economists expect the US added 240,000 jobs in April — a slowdown from March. I’m going to keep this simple, there were a lot of margin calls, liquidation and options rolling going on yesterday, and I expect more of the same today.

Our Lean

Ideally, I want to buy a lower opening. I am long 2 ES from 5039.50 and will add if we get a gap down and hold all day. If the ES gaps higher due to the big premium between the S&P cash and the ES I can’t rule out selling it, but I feel strongly if it fills the gap it will rally again, there are just too many shorts and upside stops in the ES not to go for them.

Employment days have done very well since 2013 – especially when SPY has closed above its 200ma and in the top half of its intraday range on the day before.

MrTopStep Levels:

How to use MTS levels

MiM and Daily Recap

ES recap

The ES traded up to 5090.00 at 8:47 am on Globex and opened Thursday’s regular session at 5083.25. After the open, the ES traded 5088.75 and sold off down to 5064.50 at 9:37, back-and-filled for the next 10 mins and then sold off down to 5036.25 at 10:09, and then rallied up to 5066.75 at 10:31, a 30-point rally in 22 minutes, sold back off down to 5047.00 at 10:46, rallied back up to 5061.00 at 11:00, pulled back a few points and then traded up to 5073.00 at 11:12 — a 36.75 point rally. From there, it sold back down to another higher low at 5055.00 at 11:32, did a small 4 to 6 point back-and-fill, rallied back up to 5071.25, sold back off to 5054.50 at 12:38 and then rallied up to 5085.25 at 1:13 — 49 point off the low.

After the high, the ES pulled back to the 5075 area, did a little sideways-to-up action, and then traded up to 5088.75, up 52.5 points off the low. The ES pulled back a bit then made 4 new highs 5088.75 at 2:10, 5092.00 at 2:40, 5098.25 at 2:45, and up to the high of the day at 5100.75 at 3:11. After the high, the ES pulled back to the 5091.00 area at 3:11, rallied back up to a lower high at 5098.25 at 3:24 and then sold off down to 5080.00 and traded 5085.25 as the 3:50 cash imbalance showed $299 million to buy and then rallied back up to 5093.75 on the 4:00 cash close.

After 4:00 it was the long wait for AAPL’s earnings release and the ES rallied back up to 5098.75 at 4:12, pulled back to 5089.00 at 4:28, and then traded down to a 5087.00 double bottom at 4:30 and then ripped up to 5112.00 at 4:30:03 as Apple revenue declined for the fifth time in the past six quarters but announced the largest stock buyback in history — $110 billion. The ES settled at 5111.00, up 57.25 points or +1.13%, and the NQ that made its low for the day at 17,386.25 settled at 17,743, up 304.75 points or +1.28%, the 10-year U.S. Treasury yield edged lower, settling at 4.569, Bitcoin regained some ground to trade around $59,000, after falling more than 10% over three days of losses, gold futures for the most active June contract traded lower by -$1.40, settling at $2,309.60.

In the end, the ES made a new low and then rallied all day. In terms of the ES’s overall tone and with the exception of the early sell-off, the futures were firm all day. In terms of the ES’s overall trade, volume was lower: 225k traded on Globex and 1.267 million traded on the day session for a total of 1.492 million contracts traded.