Down 3 Days in a Row; Jobs Report Tomorrow

Can we find a short-term low?

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Our View

The ES has now sold off 100 points from its December 4841.75 contract high, while the NQ is off more than 675 points from its recent high. 

Is that enough? It could be in the near term, but I don't think the low is in for January. As for the Fed, I am not surprised at all. 

There was too much irrational exuberance between the markets going up and the big bets on interest rates going down. For a quick refresh, last month the Fed said it expects about 75 bps of rate cuts in 2024. However, the market is pricing in about 150 bps worth of cuts. 

There is just too much time in the year to throw your hat in one direction. Today's economic calendar includes the ADP number, initial jobless claims, and the S&P MPI services number and tomorrow is the week one FRYdays options expiration and the December Jobs report. 

That all said, the S&P is headed for its first down week in 10 weeks — so keep that in mind when it comes to the trend. 

Our Lean — Danny’s Trade

This is Danny Riley’s personal trading plan for the day.

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MiM and Daily Recap

ES 15-min recap

The ES struggled after Tuesday's late rip and sold off down to 4762.25, down 26.25 points, opening Wednesday's regular session at 4764.50. After the open, the ES traded 4765.25 and then sold off down to 4756.00 at 9:59, rallied back up to 4767.75, dropped back down to a higher low at 4757.75, and then rallied up to a new high at 4769.50 at 10:06. From there, the ES made a beeline down to a new low at 4546.50 at 10:47, rallied up to 4658.00 at 11:04, back-and-filled for the next 32 minutes, then sold back off down to a higher low at 4749.00 at 12:45 and then rallied up to 4767.50 at 1:02. 

After the rally, the ES sold off down to 4748.75 after the Fed said it had no timetable for when it was going to lower rates. The ES rallied up to a 4771.75 high at 2:22 and then sold back off down to the 4748.25 at 3:47 level and traded 4748.75 as the 3:50 cash imbalance showed $2.4 billion to buy and sold off to a new daily low at 4741.00 at 3:56. The ES traded 4747.50 on the 4:00 cash close, then chopped around in a 4-point range and settled at 4738.75 on the 5:00 cash close, down 39.75 points or 0.83% on the day. 

In the end, no one promised us a rose garden. In terms of the ES's overall tone, the ES continues to follow the weak leader, tech stocks. In terms of the ES's trade, volume was higher, 231k traded on Globex, and 1.357 traded on the day session for a total of 1.588 million contracts traded. 

Technical Edge

  • NYSE Breadth: 25% Upside Volume

  • Nasdaq Breadth: 21% Upside Volume

  • Advance/Decline: 29% Advance

  • VIX: ~14

S&P 500 — ES Futures

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Guest Post

PTG / Taylor 3 Day Cycle

Author: David D Dube’ (a.k.a. PTGDavid) — Website

Prior Session was Cycle Day 2 (CD2):  Markets continued their decline, pushing down to the 12/20/23 lows and fulfilling Cycle Day 2 Violation Level (4747).  Prior range was 49 handles on 1.587M contracts exchanged. 

 …Transition from Cycle Day 2 to Cycle Day 3

This leads us into Cycle Day 3 (CD3): Price is currently below Cycle Day 1 Low (4765.50) with historical odds of recovering this level during today’s session. Should price fail to reclaim this level, then Cycle will be marked as “failed”, which historically only occurs 9% of the cycle tracking, extending over 12 years. Failed cycles are signals for potential investor/trader sentiment shift, which could portend extended market weakness.  As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4750, initially targets 4765 – 4770 zone. 

Bear Scenario: Price sustains an offer below 4750, initially targets 4730 – 4725 zone.

PVA High Edge = 4767       PVA Low Edge = 4750         Prior POC = 4756

*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet  > > Cycle Day 3 (CD3)

Thanks for reading,

PTGDavid

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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