Buying the Dips

An interesting year-end strategy

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Our View

This post is from a friend of mine, former floor trader Peter Yastro. I posted it on Twitter, but felt it would also make a good post in the OP. Peter is a long stock guy so this rally has been good for him. Here are a few lines about the days ahead:

Peter Yastrow

  • Expect pretty small ranges until the very end of the year.

  • Look for a big whipsaw move at December end/Jan start as hedge funds all set up the “wash trade.”

    • They put on a big long, and the next day completely hedge it with a big short in a highly correlated product. (Like long stocks, short futures).

  • After 364 days they have a short-term loss, and after 365 days they’ll have a long-term gain.

    • They use the loss to offset the gains for the year and benefit since tax rates are different for short term and long-term gains.

Our Lean — Danny’s Trade

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

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MiM and Daily Recap

The ES traded up to 4803.75 on Globex and traded 4797.50 on the 9:30 regular session futures open. After the open, the ES traded 4796.50 and went on to make 6 new highs up to 4817.00 at 11:40, taking out the old contract high at 4817.00 at 11:50 and then pulled back to the 4808.25 level at 1:12. 

For the next two hours, the ES back-and-filled in a 5 to 8 point range, traded up to 4817.50 at 3:45, pulled back to 4812.50 and traded 4813.50 as the 3:50 NYSE cash imbalance showed $1.98 billion to buy. The ES traded up to a new high at 4821.50 at 3:56 and traded 4820.25 on the 4:00 cash close. After 4:00, the ES traded down to 4815.75 and settled at 4818.25 on the 5:00 futures close, up 28 points or +0.53% on the day

In the end... the bull has gone wild. In terms of the ES's overall tone, it was firm all day. In terms of the ES’s overall trade, volume was low: 155k traded on Globex and 907k traded on the day session for a total of 1.026 million contracts traded.

Technical Edge

  • NYSE Breadth: 85% Upside Volume 

  • Nasdaq Breadth: 68% Upside Volume 

  • Advance/Decline: 81% Advance

  • VIX: ~12.50 

S&P 500 — ES Futures

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Guest Post

PTG/ Taylor 3 Day Cycle

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

Prior Session was Cycle Day 2 (CD2):  Normal CD2 as price consolidated in DTS's upper target zone between 4815 - 4825 as outlined in prior DTS 12.19.23. Prior range was 33 handles on 1.062M contracts exchanged. 

 …Transition from Cycle Day 2 to Cycle Day 3

This leads us into Cycle Day 3 (CD3): There still remains additional upside potential to achieve 3 Day Cycle Target (4848), although the next pullback/decline can begin at any time since cycle statistic has been satisfied. As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4815, initially targets 4825 – 4830 zone. 

Bear Scenario: Price sustains an offer below 4815, initially targets 4805 – 4800 zone.

PVA High Edge = 4819       PVA Low Edge = 4806         Prior POC = 4815

*****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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