Inflation Report on Tap. Then The Fed.

It's a busy week.

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Our View

We’ve got a full slate this week, starting with this morning’s CPI report. Tomorrow we get the Fed and Powell’s afternoon press conference, retail sales are on Thursday and the December triple-witching expiration is on Friday. Other noteworthy events include the PPI report and bond auctions. 

According to Goldman Sachs its the BUYBACK BLACKOUT: 

“We are in the first week of the estimated buyback blackout period. We estimate this blackout period will run through 1/19/24. As a reminder, we estimate companies enter blackout ~4-6 weeks prior to earnings. We currently estimate ~15% of the S&P 500 is in the blackout window with ~30% in blackout by the end of the week. During the blackout period, our corp desk's executions typically decline by ~30%. On the authorization front, 2023 YTD authorizations stand at $998B, the third most active year YTD.”

Now, I don't know if the buyback/blackout period had much to do with yesterday's slower trade, but when you throw that in with all the other events this week, it makes sense. 

What I think is, “the ES is up too much to buy, but is too firm to sell.” 

With the positive shift in some of the economic reports, the ES and NQ are expecting more of the same: Better numbers and higher prices. That said, while I’m bullish, the ES has been up 6 weeks in a row. We know the ES can't keep going up without pullbacks. In fact, the small pullbacks and back-and-fill have been the hallmarks of the rally.

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 ESH traded up to 4666.50 on Globex and opened Monday's regular session at 4655.75. After the open, ES traded down to 4653.00 at 9:33 and for the next hour and thirty-three minutes, slowly ground its way up to 4669.50 at 10:59. After the high, the ES slowly pulled back to a 4656.50 double-bottom at 11:37 and then traded up to a new high at 4674.25 at 1:45. That's when I put this out in the MrTopStep chat:  

  • IMPRO: Dboy :(1:39:45 PM) : es 75s are always tricky

The ES made a 4676.25 double top at 2:37, pulled back to the 4670.75 level at 3:06, and then back-and-filled in a 4 to 6-point range until the cash close. The ES traded 4676.00 as the 3:50 NYSE stock imbalance showed $1.9 billion to sell, traded 4677.50 on the 4:00 cash close, and made a new high at 4679.00. After 4:00, the ES traded in a choppy and narrow range and settled at 4677.00 on the 5:00 futures close, up 16.75 points or +0.36% on the day. 

In the end, it was dead, with very little trade or volume. In terms of the ES's overall tone, the lower volumes favored the upside — “thin to win.” In terms of the ES's overall trade, Friday's low volume carried into yesterday's trade: Only 172k traded on Globex and 885k traded on the day session for a total of 1.057 million contracts traded. 

Note the recent momentum and end-of-day MIM totals, as totals start to come in on the “net sellers” side of things.

Technical Edge

  • NYSE Breadth: 52% Upside Volume 

  • Nasdaq Breadth: 37% Upside Volume 

  • Advance/Decline: 50% Advance 

  • VIX: ~12.75 

S&P 500 — ES Futures

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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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