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Market Review

NJ – Discovery Trading Group

The ESU20 traded sideways over the last week squarely in an uptrend well above its 50-day moving average.  As written last week, “last Thursday’s 3284.50 high becomes a significant resistance price area which if cleared, the ESU20 should retest the 3317s resistance area.”  The 3284.50 resistance held price all week until Monday when the ESU20 grinded through the resistance however the area is not cleared yet and price could easily fall back into or through last week’s 3200 – 3285 range this week.  

Last week’s Fed actions did little to motivate US stocks but the blowout earnings by Apple, Amazon, Facebook has given the ESU20 some buoyancy.  Coronavirus fears, US/China tensions and promises of another coronavirus relief plan are keeping the ESU20 bulls in check.

Volatility continues to shrink as the ESU20 grinds higher.

The 3190s remain significant support and if cleared, the ESU20 should drop to test the 3105 – 3119 support area.  Above, 3317 remains the next area of resistance with the ESU20 all-time highs above that.  Perhaps a relief bill will send the ESU20 to new all-time highs.

Below is a snap of the ESM20 daily chart with the above support and resistance numbers marked for reference.  Thanks again for reading.  For more information on how DTG can help your trading, visit us at DiscoveryTradingGroup.com


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MiM


The 5 point drop during the 15:50 reveal was a bit of a surprise as the MOC was a fairly small imbalance. There was size on both the buys (1.2B) and the sells(1.6B) which netted out to the -400M. It was light volume yesterday and any program of size could move the market quickly. That 15:55 candle again retraced the 15:50 MOC candle and sold off into the close.

Questions?  Please email me: Marlin@mrtopstep.com

Get the skinny when we get it:  Join the MiM. 


Covid-19

Top 10 Worst
Top Ten Best

We continue to track Covid-19 across all 50 states, DC, and Puerto Rico to gain a better understanding of what is happening. While detected cases continue to expand, we are not seeing the equivalent expansion in hospitalizations and deaths. Our table uses 7-day averages and takes a 5-day linear regression slope in order to detect changes as quickly as possible. We score each state by a normalized slope and ranking in each category (infected, admitted, and deaths).

We like the pace of improvement in FL. Today we need to see about 4,500 new cases to keep at this quickening pace but anything under 9,200 will continue the downside, should be no problem.
Texas is still playing with their data and how to report it. We need to see it settle in order to infer trends. Today we would like to see under 6,000 new cases. Not sure that is going to happen but less than 8K will have us lower by a little bit.
Californias cases are dropping but not at FL’s pace so CA needs to kick it in gear. They have a fairly low number of 6000 to beat today that will be tough but we need to see those types of numbers to keep the downtrend intact.

We continue to focus on our top 3, Florida (20M pop), Texas (30M), and California (40M), looking at daily deaths, but more importantly, changes in the count.

Florida still just at the tipping point. We would expect to see quickening pace at the end of this week.

Someone needs to mess with Texas cause their data is all over the place. We are still eating our way through last week’s recalibration in deaths so ignore the butte on the chart and watch what happens from here. TX need’s under 164 deaths today and I think that will be hard to make so in our view Texas really hasn’t rolled over yet in daily deaths.

Any day now in CA we will see the roll over. Could be today if they get less than 73, but most likely Thursday’s number will be a dramatic change.

Over / Under

These are the over/under numbers for 7/31/2020. In order to push the 7-day average lower, today’s reported numbers need to be lower than the target number. A new case or death number that is higher will increase the 7-day average.

Yesterday’s over/under numbers and actual are also in the table.

YesterdayYesterdayTodayToday
StateCasesDeathsCasesDeaths
Florida9,344 / 4,75278 / 739,230191
Texas5,810 / 11,529153 / 1798,342164
California8,259 / 5,73979 / 326,00073
New York536 / 5453 / 25349
Yesterday’s number are the over-under number / actual. An actual that is greater than the over-under number will send the 7 day average higher (not good) a lower number will send the 7 day average lower (good).
Use today’s number to watch the releases to determine the trend.

To use our table, go to https://t2r4.com/cv19/views. Each column is sortable and if you click on a cell you will get a time-based chart of the state.

Wear your masks!
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Chart of the Day

GS Sentiment Indicator: right on average
Goldman Sachs Sentiment Index

Top Stories on MTS Overnight:


Globex

(ESH20:CME) GLOBEX Session(ESH20:CME) Day Session 
High 3286.00Opening Print: 3283.00
Low: 3254.75High 3295.50
Volume: 260KLow: 3276.50

ES Settlement 3288.25

Total Volume   1.227 Million

S&P 500 RECAPTrade Date 8/03/ 2020

#ES Money Maker Chart

After rallying late in the overnight session the S&P 500 futures opened the cash hours at 3283.00 and within the first 10 minutes of the session traded down to 3276.50 which would hold as the low of the day. From there the ES rallied into 9:00 buy programs which pushed the index to an early morning high of 3292.00. Following a mid-morning higher low, the ES once again pushed up to a 3293.50 morning high before trading sideways through the Euro close and into the early afternoon.

The thin-to-win type price action continued to see buyers chop the futures higher to a 3295.50 high of the day just after 1:30. However, as the ES made its way into the final hour, sellers began to control the close as the benchmark future withdrew 12.75 handles from the high, making a late day low of 3282.75 before settling the day at 3288.25 up 27.00 handles on the day or +.89%.

In terms of the overall day, it was a quiet thin-to-win type of chop that favored buyers until the late day profit-taking. Total volume amounted to a low 1.227 million. 

Our View

#FAANG + #MSFT Make Up 25% of the #S&P500’s Market Cap 

Well the S&P 500 futures failed to take out ES 3300 ‘AGAIN’ I have to admit, it’s not been an easy call. That said, I still think the ES is going to print above the big figure and continue to forge higher. My own feeling is that if the government had finalized the agreement for another round of new coronavirus aid package I would not be writing this. The other part, the MIM flip from $465 million to buy to $ 290 million to sell didn’t help either.  As they say… such is life. 

While I maintain a bullish view of the stock market I’m also aware that the first three weeks of August can be a very very volatile period. 

TikTok Tit for Tat 

Microsoft’s push to buy TikTok’s U.S. operations took a strange turn when President Donald Trump said any sale would have to include a substantial payment to the US  and insisted that any deal must  be made by Sept. 15 drew a strong rebuke from Chinese state media, which called the potential sale “theft” Additionally, the Trump administration is also exploring whether he can act unilaterally to extend enhanced unemployment insurance payments and extend the moratorium on evictions. All the above has spooked the S&P this morning. 

Our view, Turnaround Tuesday may turn into a Turn-em down Tuesday as China relations hit a new low. My first level of support comes at the 3268-3271 level and the 3258-3255 area. It seems like the high level of uncertainty concerning the new stimulation program and MSFT’s TikTok deal could weigh down on the Nasdaq this morning.

Danny Riley is a 39-year veteran of the CME  trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.


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As always, please use protective buy and sell stops when trading futures and options.

Disclaimer: Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Decisions to purchase or sell as a result of the opinions expressed in the forum will be the full responsibility of the person(s) authorizing such transaction(s). BE ADVISED TO ALWAYS USE PROTECTIVE STOP LOSSES AND ALLOW FOR SLIPPAGE TO MANAGE YOUR TRADE(S) AS AN INVESTOR COULD LOSE ALL OR MORE THAN THEIR INITIAL INVESTMENT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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