Expect the Unexpected

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The ES and NQ both opened low and sold off hard in the first hour of trading. The ES traded down to 5744.00, while the NQ (the weak link) made a low at 20,075.25. After hitting the lows, the ES chopped around a bit, and that’s when I put this out in the room:

See Time & Sales

IMPRO : Dboy : (11:30:50 AM) → "I got this feeling that we see a pop."
IMPRO : Dboy : (11:31:47 AM) → "Screw some shorts, then sell ’em again."
IMPRO : Dboy : (11:32:56 AM) → "Just seems too easy."
IMPRO : Dboy : (11:59:33 AM) → "There she blows."

The ES rallied 131.75 points up to 5875.75, and the NQ rallied 657.25 points up to 20,732.50. Then, at 3:39 PM, the wheels came off the wagon, and both the ES and NQ dropped like a rock. The ES sold off down to the 5810 level and then dropped further to 5769.25 down 107.50 points as the MIM came out showing $4.5 billion to sell. It sold off to 5775, and the NQ dropped to 20,324.00, a 408.25 point drop. It was clear that the imbalance had been leaked, as the market dropped sharply before 3:50 PM.

Why did I post that when the markets looked so bad? One reason was that the ES found support at 5744 (5750) and the NQ at 20,490. The other reason was that it was getting too easy to short, and it felt oversold.

After the ES rallied to the highs, I sold it several times with tight stops. When the ES sold off, I picked up 50 points it ran another 50 and that’s when I posted this:

IMPRO : Dboy : (3:55:00 PM) → "Bounce time now."

The ES then rallied back up to 5840 (71.25 points).

#GS End-of-Day Notes (Rubner)

1. CTA volumes are large on the open and the close.

2. Buyback desk orders stop at 3:50 PM.

3. Some added hedges ahead of Trump tonight.

4. Leveraged ETF strategies act as synthetic short gamma.

5. Lots of incoming on the sell-off into the close, not many on the rally back.

We have seen some wild moves over the last three sessions—Friday's big late rally, Monday’s big drop—but I think yesterday’s trade topped them all. I know the headlines play a big part in this, but I would say this is extreme.

I know people think Trump is crazy, but he’s a dealmaker. He got Ukraine to sign the mineral deal, and on Fox Business, there was talk that he’s going to announce easing up on Canada and Mexico tariffs, he may roll them back as early as tomorrow. Seems like The Art of the Deal means extreme market swings.