We’re in a “Buy the Pullbacks” Mode
Looking for the 20-30 point dips
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Our View
A trading buddy of mine thinks the ES goes down today and Tuesday, and while it could, it had a strong finish to Friday’s session and is trading higher again on Globex — in fact, it’s higher by about 20 handles right now.
I’m 100% sure the ES will pull back, but I do not see a big drop.
What I see is the 30 to 50-point pullbacks being bought. I doubt we blow out ES 4900 right away, but that’s coming. This week has a busy earnings schedule that includes Tesla, Netflix, Intel, Visa, GE, IBM and many Dow Jones Industrial Average stocks. We also have the PCE report set for Friday — the Fed’s preferred inflation report.
Our Lean
According to CFTC data, short open interest in the 10-year note is the highest it has ever been. The ES has now rallied 765.5 points off its 4122 December low to last night’s 4887.50 high.
From the recent low to the current high, the ES has rallied ~144 points, with the 50% retracement sitting down at ~4818. Ideally, this would be where I start to scale back in on the long side.
Our Lean: I can’t rule out trying to sell a big gap up — especially if we see over 250k ES traded on Globex — but ideally I want to buy the 20 to 30-point pullbacks, 50 points would be a bonus.
MiM and Daily Recap
The ES traded up to 4841.25 and opened the regular session at 4823.25. After the open, the ES traded up to 4825.00 and then sold off down to 4815.00 at 9:48. It rallied up to 4829.75 at 10:00, then sold off down to a higher low by two ticks at 4815.50. After the low, the ES did a sideways to higher back-and-fill just above and below the VWAP at 4823.25 and then rallied straight up to 4839.25 at 11:11, and then sold off 11 points down to 4828.00. From there, it did another sideways-to-up back-and-fill and then shot up to 4847.25 at 12:31.
After holding near the highs, the ES sold off down to 4839.00 at 12:42 and that’s when a big buy program hit and the ES made 7 consecutive new highs up to 4874.25 at 2:30, sold off down to 4859.75 at 2:36 and then fell into another sideways-to-up back-and-fill that pushed the futures up to 4872.25 at 3:05, traded down to 4864.50 at 3:25 and traded 4868.00 as the 3:50 cash imbalance showed $68 million to sell. The ES popped at 3:55 popped as the MIM showed $2.1 billion to buy and traded 4870.00 on the 4:00 cash close. After 4:00, the ES up-ticked and settled at 4871.75, up 62.5 points or up 0.64%.
In the end, it was a mammoth short option gamma squeeze. In terms of the ES’s overall tone, it was firm (+0.64%) but not as firm as the NQ (1.34%). In terms of the ES’s overall trade, volume was high: 279k traded on Globex, and 1.444 million traded on the day session for a total of 1.719 million contracts traded.
Technical Edge
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NYSE Breadth: 70% Upside Volume
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Nasdaq Breadth: 70% Upside Volume
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Advance/Decline: 68% Advance
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VIX: ~13.50
ES
Levels from HandelStats.com
ES daily
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Upside: Trade and hourly close above 4889.75 targets 1sd at 4899.29. Hourly close above there targets 4920.85, then 2sd at 4926.83. Hourly close above targets 1sd weekly at 4933.33, hourly close above there targets 3sd at 4954.37.
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(DAILY CLOSE ABOVE 4920.85*** AND IT IS GOING TO 4997.75).
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Downside: Trade below 4889.75 targets 4886, then 4882.25. Trade and hourly close below there targets settlement at 4871.75. Trade and hourly close below there targets -1sd at 4844.21. Hourly close below there targets 4835.25, then 4824.88, then -2sd at 4816.67. Trade and hourly close below there targets -1sd weekly at 4810.17, then -3sd at 4789.13.
NQ
NQ Daily
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Upside: Hourly close above 17525.35 targets 17552.25, then 17570. Hourly close above there targets 1sd at 17602.12. Hourly close above there targets 17656.50. Hourly close above there targets 17724.75 then 2sd at 17747.50 then 17762.60***.
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Daily closes above 17385.60 would confirm that target.
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Downside: Trade and hourly close below 17525.35 targets settlement at 17456.75. Hourly close below there targets 17385.60, hourly close below there targets 17316 then -1sd at 17311.38. Hourly close below there targets 17238, then 17203.62, then 17169.25, then -2sd at 17166.
Guest Post — A Note From HandelStats
Every month I put out some basic stats. They are intended to be a starting point for expectations for the month. Best and worst months, averages etc. With a $99/month subscription to Handelstats Premium Membership:
Our proprietary quantitative analytics numbers can identify market inflection points with precision, allowing you to make informed trading decisions that can give you a significant advantage over other traders.
Included with this offer:
Private twitter feed, @HandelPlus, with daily market outlook for the ES and NQ
Daily and Weekly Standard Deviation Levels for: SPX, ES, SPY, QQQ, NQ, NDX, RTY, IWM, INDU, CL, SVXY, UVXY, TQQQ, TNA, TZA, TLT, TBT.
ES, NQ – Beginning of the week chart with Weekly Standard Deviation Levels
Daily Standard Deviation Table Levels for: SPX, ES, SPY, QQQ, NQ, NDX, RTY, IWM, INDU, CL, SVXY, UVXY, TQQQ, TNA, TZA, TLT, TBT.
Here’s one example
Daily Pro Pivots Data Sheet
HandelStats Range Table Levels
Monthly SPX Statistics covering over Fifty Years of Historical Data
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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