I'm Not Buying Into There Being a Low -- Yet

Too many risks remain right now

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Our View

It's been over 17 days since Hamas attacked and killed over 1,400 Israeli citizens and 13 days since it began its military build-up near the Israeli border.

After falling in four straight sessions, the ES has had two big days of short-covering rallies (although technically still closed lower on Monday). Still, it’s been trying to find a footing.

The PitBull’s rule is that the ES tends to rally early in the day and early in the week, and while the ES may be 'trying' to rally, I still think it will be sold. I'm going to keep it at that.

Our Lean

I still think if the ES gets up to the 4290 to 4305 level, it will be a great sale.

In the meantime, keep selling the 30- to 50-point rallies, which has worked fairly well. I don't think Israel is going to just walk away, so the S&P is in a holding pattern.

Our Lean: Sell the early rallies. That doesn't mean you can't buy a 30 to 50-point dip, but I still think we see a lot lower prices.

For those of you who like HandelStats levels, here they are:

  • Upside: Hourly close above 4261.75 targets 4270.50, then 4:15 settlement at 4273.75. Above settlement targets 4283.62. Hourly close above there targets 4297.50, then 1 sd at 4310.84, then 4314.62. Hourly close above there targets 4336.70, then 2 sd at 4347.93.

  • Downside: Hourly close below 4258.50 targets 4251.25, then 4243.76, then -1 sd at 4236.66, then 4229.75. Hourly Close below there targets 4214.12, then 4207.85, then -2 sd at 4199.57. Daily close below here is bearish.

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 4268.25 on Globex and opened Tuesday's regular session at 4261.75. After the open, the ES traded 4260.50, rallied up to 4274.50 and then sold off down to a new low at 4259.50 at 10:51. From there, it traded up to 4283.50 at 10:50 and then sold off all the way down to 4242.00 at 12:56. Yes, there were a lot of little pops and drops along the way, but in the name of lowering the size of the recap, that's what happened.

After the low, the ES rallied up to the 4261.00 area at 1:32, back-and-filled under the VWAP until 2:19 when the ES rallied 14.5 points to a new high at 4272.00 at 2:33. It then made 6 new highs up to 4276.25 at 3:49, traded 4275.50 as the 3:50 cash imbalance showed $1.7 billion to buy and then climbed up to 4284.75 on the 4:00 cash close. After 4:00 when MSFT and GOOGL reported earnings, the ES traded up to 4290.50 at 4:02 and then traded down to 4267.00 at 4:06, rallied back up to 4282.75 at 4:11 and traded 4270.25 on the 5:00 futures close, up 29.50 points or up 0.70%.

In the end, there continues to be a high level of nervousness surrounding the index markets. In terms of the ES’s overall tone, there was a high level of two-way price action with the bull winning out. In terms of the ES’s overall trade, volume was lower: 276k traded on Globex and 1.453 million traded on the day session for a total of 1.729 million contracts traded.

Technical Edge

  • NYSE Breadth: 65% Upside Volume

  • Nasdaq Breadth: 74% Upside Volume

  • Advance/Decline: 70% Advance

  • VIX: ~$19

S&P 500 — ES Futures

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ES

Levels from HandelStats.com

ES Daily

  • Upside: Hourly close above 4261.75 targets 4270.50, then 4:15 settlement at 4273.75. Above settlement targets 4283.62. Hourly close above there targets 4297.50, then 1 sd at 4310.84, then 4314.62. Hourly close above there targets 4336.70, then 2 sd at 4347.93.

  • Downside: Hourly close below 4258.50 targets 4251.25, then 4243.76, then -1 sd at 4236.66, then 4229.75. Hourly Close below there targets 4214.12, then 4207.85, then -2 sd at 4199.57. Daily close below here is bearish.

NQ

NQ Daily

  • Upside: Hourly close above 14786 targets 4:15 settlement, then 14863.50. Hourly close above there targets 14921.38. Hourly close above there targets 1 sd at 15010.93, then 15033.25. Hourly close above there targets 15106.25, then 15137, then 15155.25, then 2 sd at 15175.37.

  • Downside: Hourly close below 14755 targets 14722.12, then 14689.75, then -1 sd at 14682.07. Hourly close below there targets 14593, then -2 sd at 14517.63.

Guest Post

PTG / Taylor 3 Day Cycle

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

Prior Session was Cycle Day 1 (CD1): We wrote in prior DTS 10.24.23 Briefing: "Markets are at their targets, therefore the rally could start at any time and may negate the ES failure." As expected, markets rallied from the opening and negated yesterday’s failure. Prior range was 48 handles on 1.757M contracts exchanged.

Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): Though the expected rally did unfold in prior session bulls could not sustain high bid, hence retreated back to the 5-day Point of Control (4265). Normal for CD2 is typically for some consolidation of recent activity. Two-way choppy flow is anticipated given both sides are battling for dominance. As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4265, initially targets 4280 – 4285 zone.

Bear Scenario: Price sustains an offer below 4265, initially targets 4250 – 4245 zone.

PVA High Edge = 4277 PVA Low Edge = 4260 Prior POC = 4271

*****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 2 (CD2)

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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