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(Free) Regional Bank Worries Persist, Weigh on S&P
CPI number is on tap tomorrow
Danny Riley
May 09, 2023
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Our View
One day, we will break out of this range and get a better trading environment. One day, we’ll be back in a bull market buying the dips, riding the uptrend and watching our friends and families’ 401Ks go up.
I can hardly wait for that…but that’s not where we find today’s market.
If you sold yesterday’s open and bought the pullbacks like Our Lean, you did very well. Near the open, the SPDR S&P Regional Banking ETF (KRE) opened higher by more than 2.5%.
By the close, it was down 2% on the day and closed just off its session low. In that sense, the S&P did a pretty good pushing through the afternoon headwinds (albeit on low volume). The regional banks remain a worry and honestly, they should.
Have a look at how large some of the bank failures have been this year:
US bank failures, so far:
— unusual_whales (@unusual_whales)
2:41 PM • May 8, 2023
Our Lean — Danny’s Trade Plan
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The ES traded up to 4161 on Globex and opened Monday's regular session at 4154.75. After the open, the ES made a high at 4156.25 and sold off down to 4146.50 at 10:39, rallied up to 4153.25 just after 11:00 and 4152.50 just after noon. The ES slowly chopped around in a tight point range until 2:04 when it rallied up to 4154.75 and then dropped down to 4137.50 at 2:08 and then rallied up to 4157.50 at 3:01.
The ES pulled back to just below the VWAP at the 4149.25 as the early imbalance showed $142 million to buy and traded 4154.75 at 3:42. It traded 4155.25 as the 3:50 cash imbalance showed $395 million to sell, trading 4153.25 on the 4:00 close and settled at 4151 on the 5:00 futures close, up 2.50 points or just above flat on the day.
In the end, Mondays are the 'slowest' trading day of the week and yesterday fit the pattern. In terms of the ES's overall tone, there was some kind of buy-S&P/sell-Nasdaq rotation. In terms of the ES's overall trade, volume was low at 999.27K contracts traded, the lowest volume regular session of the year.
Technical Edge
NYSE Breadth: 58% Upside Volume
Advance/Decline: 47% Advance
VIX: ~$17.50
Yesterday was a flat, low-volume, traction-less kind of session. We didn’t get many setups out of our individual stock trades (that’s okay), while the ES is leaning on an inside-and-down daily rotation as it flirts with Monday’s low of 4137.50 ahead of the open.
Tomorrow’s CPI number should rattle the cage a bit. Soft numbers may have the market truly believing the rate hikes are down. Hot numbers are going to cause some issues (as Fed will be in a tough spot with its rate hikes and as the regional banking system is stressed).
S&P 500 — ES
ES Daily
Pivots: 4153, 4137
Upside Levels: 4165, 4175-80, 4198-4206
Downside levels: 4112-4120, 4100, 4075-80
The big range remains 4200 on the upside and 4075 on the downside.
SPY…
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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
If following these setups, can consider going ½ size on any or all of them, given binary situation of CPI on Wednesday pre-open.
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Go-To Watchlist
Feel free to build your own trades off these relative strength leaders
Relative strength leaders →
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Economic Calendar
