Dow Continues to Hit Record Highs

SPX rides 7-week win streak

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Our View

The Dow set a record for a third straight day.

The S&P 500 advanced for a seventh consecutive week, its longest winning streak in six years, after the Fed hinted Wednesday it will likely slash interest rates next year. 

However, a senior Fed official today said that central-bank policy makers weren’t actively debating when to cut rates, an apparent effort to temper markets’ exuberant interpretation of Chair Powell’s recent comments.

The Wall Street Journal’s James Mackintosh cautions investors against following the crowd in betting on a soft landing — each of the past three years had a similarly strong consensus that proved entirely wrong.

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 recap

The ES traded up to 4789.00 on Globex at 5:37 am, sold off down to 4765.25 at 8:43 am and opened Friday's regular session at 4768.25. After the open, the ES sold off down to the 4761.50 level at 9:35 and then back-and-filled from 4761.75 to 4771.25, but mostly in a traded in 5-point range until 10:12 when the ES started going bid while the NQ continued to move higher. 

The ES traded up to 4778.25 at 11:24 and then fell into another back-and-fill at the VWAP until 11:17 when the ES made a 4766.00 double bottom at 1:17, traded back up to the VWAP at 4772.25 and then dropped down to a new low at 4757.25 at 1:56. After some back-and-fill at the lows the ES slowly back and filled its way back up to 4466.50 at 2:30, chopped up and down in a 5 point range and then popped hard off the lows. The ES traded 4766.75 as the 3:50 cash imbalance showed $XX for XX, traded up 4779.50 and traded 4766.75 at 4:00. After 4:00, the ES bounced slightly and settled at 4769.50 on the 5:00 futures close, down 6 points or 0.13% on the day. 

One of the mistakes traders make is expecting a big December Triple Witching. The quarterly expirations, especially the December opex and end of the year expiration, was one of the busiest days of the year for my S&P operation on the CME floor. Seven guys all slinging phones until 11:00 and it would start back up after 1:30, but that's not how it works today. Today on the open and close, billions of dollars of options expire or switch hands — all done by electronic order matching.

In the end the best trade was in the first and last hour. In terms of the ES’s overall tone, there was a sell ES/buy NQ rotation, so when the NQ was going down, the ES got real weak. In terms of the ES's overall trade, volume was steady: 352k traded on Globex and 1.301 million traded on the day session for a total of 1.653 million contracts traded. 

Technical Edge

  • NYSE Breadth: 27% Upside Volume 

  • Nasdaq Breadth: 42% Upside Volume 

  • Advance/Decline: 30% Advance

  • VIX: ~12.25

S&P 500 — ES Futures

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Economic Calendar

None.

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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