Where will the next crisis come from?

Current direction still undecided.

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Our View

There is always a crisis, and while I remember a few of them, I could not remember them all. So I asked ChatGPT how many crises there were from 2009 (the first year for MTS) to October 21, 2024. Because of the length, I am going to link what the BOT came up with:

https://mrtopstep.com/timeline-of-recent-economic-upheavals

Why am I listing this? Because there is a new crisis brewing in the form of the U.S.’s nearly $37 trillion dollar debt and the exploding interest it pays each month. At an interest rate of 5.5%, the U.S. would pay approximately $168.21 billion per month in interest on its $36.7 trillion debt. At an interest rate of 5.5%, the U.S. would pay approximately $183.33 billion per month in interest on a $40 trillion debt. And at an interest rate of 5.5%, the U.S. would pay approximately $229.17 billion per month in interest on a $50 trillion debt. If the debt increases to $40 trillion, monthly payments would be $183.33 billion, and if it were to go to $50 trillion, monthly payments would be approximately $229.17 billion per month. See where I’m going with this? It’s going to go higher, and it’s UNSUSTAINABLE. The bonds are reading right into it. Bonds made a high at 127’22 on September 17, broke through support at 126’15, and today they settled at 118’15.

Silver is on a tear. On September 1, 2022, front-month silver traded down to $17.40. On September 1 a year later, it settled at $24.56, a 41% gain, and made a low on October 23 at $20.85. From the October 23 low to yesterday’s high at 34.48, it gained 65.37% in one year. @HandleStats’ two-standard upside level was 34.44, missing by 4.5 cents. From the 2022 low, that’s a gain of 98.16%.

Bitcoin has also broken out. The low in November 2022 was 14,925 in bitcoin futures, and a year later, the futures closed out December at 42,485, a gain of 184.66%. From December until now, Bitcoin is up 58%. The most recent low was 49,365 on August 5, and from there to yesterday’s high at 67,535, Bitcoin is up 36.8% and up 352% from the November 2022 low. The daily high close was made back in March at 73,915, while the all-time high is 74,415 on the CME. @HandelStats says if Bitcoin takes out the high close, it’s going to 93,400—and it could happen fast.

Bonds made a high at 127’22 on September 17 and made a low of 118’15 yesterday, down over 7.2% from the high. @HandleStats’ minus two-standard deviation level yesterday was 118’14, missed by 1 tick after an almost 2-point down move. Famed hedge fund manager Stanley Druckenmiller has been shorting bonds, which now account for 15% to 20% of his portfolio.

MiM and Daily Recap

The ES traded up to 5897.25 on Globex and opened at 5898.50 on Monday’s regular session. After the open, the ES traded down to 5897.50, rallied up to 5902.75, pulled back to 5898.00, and then traded up to 5902.75. It then sold off 5.25 points down to 5887.50, rallied 7.25 points up to 5904.75, and sold off 5.25 points down to 5899.50 at 10:00. After that, it rallied 9 points up to 5908.50 at 10:18, before selling off 42.25 points down to 5866.25 at 11:09. The ES then rallied 9.75 points up to 5876.00 at 11:14, but sold off again down to 5865.00 at 11:31.

Following the low, the ES rallied 20.5 points up to 5885.50 at 11:58, sold off 8.25 points down to 5877.25, rallied 14.5 points up to 5891.75 at 1:18, sold off 6.25 points down to 5885.50, and then rallied 8 points up to 5893.50 at 1:54. The ES then sold off 12.25 points down to 5881.25, rallied 10.75 points up to 5892.00, and dropped 9 points down to 5882.75 at 3:36. It rallied again to 5890.50, then traded at 5888.50 as the 3:50 cash imbalance showed $1.85 billion to sell, and finally traded up to 5897.00 on the 4:00 cash close. After 4:00, the ES traded up to 5901.00 and settled at 5896.25, down 9.75 points or -0179% from Friday’s settlement or -15.24 0.26% on the day . The NQ settled at 20519.50 up 23.25 points, with a percentage change of approximately 0.113%. from Friday’s settle. For the day’s open it was up 36 points or 0.18%.

In the end, it was all about the chop. In terms of the ES’s overall tone, it’s still a buy-the-pullbacks market. In terms of the ES’s overall trade, volume was higher at slightly over 1M contracts traded.

MrTopStep Levels:

Understanding the Trading Levels

Technical Edge

Fair Values for Oct-15-2024 are as follows, SP: 46.04 NQ: 178.13 Dow: 275.47

Guest Posts: Daniel Salguero @traddr.com

Going into this week, we’re seeing strength from the previous week defended at Zone 2 on Monday. All eyes are on Zone 1 for a potential test. If it fails again, we could see excess solidified, setting up a balance between zones heading into next week. While there’s not much on the US calendar, our neighbors to the north and east will have central bank speakers to watch. If we pierce past Zone 2, the ES may migrate back toward the bulk of volume below, potentially setting up for next month’s elections.

Room Summaries

Polaris Trading Group Summary – October 21, 2024

On Monday, October 21, 2024, the trading day in the PTG room opened with consolidation as the market retested key levels around 5885. PTGDavid noted a neutral opening, with bulls needing to reclaim 5905 and bears targeting 5895. The session began with a long-side bias, and early success came when NQ fulfilled all its targets, with David stating, “NQ saved the day.”

However, bulls struggled to hold above 5905, and the market fell back inside the range, forming a “Whiplash” pattern. This pattern typically signals a reversal to the opposite range edge, which was fulfilled as price returned to 5895. The cumulative NYSE Ticks remained negative, with Financials (XLF) weighing on the market, contributing to a decline below the 5895 zone.

Later, the morning was marked by further downside, with David outlining a bearish scenario where prices sustained an offer below 5895, targeting the 5870-5875 zone, which was eventually reached. The session slowed around lunchtime, and attention turned to the potential for a 2pm “Shake n Bake” move. By afternoon, prices recovered slightly, reclaiming the 5885-5890 zone, but the session lacked momentum, leading to minimal price movement.

The day concluded with a MOC sell imbalance of $1.9 billion, which was absorbed, leading to a closing bid above 5890. David remarked that bulls effectively bought the dip, closing the day around the 5895 “Line in the Sand.” Overall, it was a day of consolidation, with notable lessons around identifying key levels, recognizing market patterns like the “Whiplash,” and adapting to changes in internals such as NYSE Ticks.

Discovery Trading Group Room Preview – October 22, 2024

NQ – Nasdaq 100 Futures

Economic Calendar

Full 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!