(Free) Breaking a Cardinal Trading Rule | Retail Earnings on Deck

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Our View

Over the last 6 months, MrTopStep has been researching the Trader Funding programs. We have learned that of the 20 such firms out there, only 2 or 3 are legitimate companies, meaning the others are 'churning and burning' their customers.

After the trader fails, he has to pay again and start over. This is how it works, but MrTopStep’s program isn't going to be part of any churning and instead will intervene with helping people learn to trade. I already know that when new people join the MrTopStep chat, they start learning new things right away. However, unlike most trader funding programs, they do not have the talent pool that we do.

Regarding the market, we have a lot of retail earnings this week, while also sporting a decent pre-market pop in the market. It’s also worthy pointing out that the VIX is higher this morning as well.

Our Lean

I broke a cardinal trading rule on Friday…

MiM and Daily Recap

The ES traded up to 4164.50 on Globex and traded 4155.75 on Friday’s regular session open. The ES printed 4158.50 at 9:44 and with the exception of the 5 to 15 point short covering rallies, it sold off all the way down to 4111.75 at 2:02. Basically, the ES and NQ struggled all day.

After the low, the ES back-and-filled in a narrow range, rallied up to 4121.25 at 3:00 and then rallied all the way up to 4133 at 3:47. The ES traded 4131.50 as the 3:50 cash imbalance showed $224 million to sell, dipped to 4129.50 and traded 4138 on the 4:00 cash close. After 4:00, the ES dipped slightly and settled at 4133.75 on the 5:00 futures close, down 5.75 points or 0.14% on the day.

In the end, the VIX told the story and ES and NQ struggled until the late-day bounce. In terms of the ES's overall tone, it was weak. In terms of the ES's overall trade, volume was on the moderate side at 1.38 million contracts traded.

Technical Edge

• NYSE Breadth: 37% Upside Volume

• Advance/Decline: 44% Advance

• VIX: ~$17.50

We’ve had some decent action out of our two individual stock trades thus far, although this week will likely be a make-or-break situation for them. As for the week, there are three things I want to note.

First, there are a lot of Fed speakers on deck (14 to be exact). So beware of some of the intraday headlines.

Second and third, I want to keep an eye on regional banks (KRE) and the dollar (DXY). When both are working against equities — aka, the KRE is dropping and the DXY is rallying — the S&P has trouble on the long side.

S&P 500 — ES

The upside has been capped by ~4175 and the downside limited to ~4115. We need a break of this area to push the outer edges of the range. Even more recently, notice how the ES has pushed higher or lower, then retreated back to the 4140 to 4150 area by the close.

• Upside Levels: 4170-75, 4198-4206, 4242

• Downside levels: 4110-15, 4100, 4075-80, 4063

SPY…

Open Positions

• Bold are the trades with recent updates.

• Italics show means the trade is closed.

• Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be B/E or better stops.)

• ** = previous trade setup we are stalking.

Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B

1. META — premium

2. CRM — premium

3. ** premium

Go-To Watchlist

Feel free to build your own trades off these stocks

Relative strength leaders →

1. premium

2. premium

3. premium

4. premium

5. premium

Relative weakness leaders →

1. premium

2. premium

3. premium

4. premium

5. premium

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!