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- Like a Tractor in a Rainstorm, the S&P Is Stuck in the Mud
Like a Tractor in a Rainstorm, the S&P Is Stuck in the Mud
That said, there's a way to approach the tape.
Danny Riley
May 23, 2023
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Our View
The bulls are making a case for the upside consisting of two main catalysts: No more rate hikes and the passage of the US budget. That’s even as the S&P is up 9.2% YTD and NASDAQ is up a whopping 21.5%.
The PitBull said the rally is only composed of a handful of stocks and talked about how the Nikkei has never traded back to its August 1990 high. He talked about Japan's 'Nifty Fifty' and that there were only a handful of companies surviving, then went on to talk about stagflation and said none of the major problems will matter until they do.
Personally, I think the S&P is stuck; it's not going to go up or down sharply. Kind of like a farm tractor stuck in the middle of a corn field in a torrential downpour, it can't back up much and it won’t go forward much either.
Our Lean
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The ES traded down to 4186.50 on Globex, rallied up to 4210.50 at 8:31 and opened Monday's regular session at 4204.50. After the open, the ES ripped up to 4121.75 at 9:40 and then sold off down to 4191 at 10:09 after a headline hit saying there was an explosion near the Pentagon and then rallied back up to 4212.75 at 11:32. With the exception of one blip down to 4198 at 10:58, the ES traded in a 5 to 7 point range until it traded down to 4200.25 at 1:16 and then back up to 4212.75 at 1:51.
The ES traded down to 4203.75 at 3:45 as the early imbalance showed $207 million for sale. The ES traded 4204 as the 3:50 cash imbalance showed $175 million for sale 4205.75 at 4:00 and settled at 4207.75 on the 5:00 futures close, up ever-so-slightly on the day.
In the end the bulls won, but it was a grinder. In terms of the ES's overall tone, it was firm. In terms of the ES’s overall trade, volume was on the low side at 1.26 million contracts traded.
Technical Edge
NYSE Breadth: 66% Upside Volume
Advance/Decline: 60% Advance
VIX: ~$17.50
**There are a handful of individual stock trades coming at 9:00 a.m. ET**
Bonds sure look interesting (more below).
Correction: Yesterday I said 10-year yields were near 10-year highs. After a second cup of coffee, I saw the error and meant to say 10-year yields were at 10-week highs — (and are now higher today).
SPY
Pivot: $418
Upside Levels: $421.22 (gap fill), $425-26
Downside Levels: $417.35, $415
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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.)
** = previously mentioned trade setup we are stalking.
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO and UBER.
[premium only]
UBER — long from $37.50 or just below — First trim $38.50-ish, second trim down to ½ position at $39 to $39.25. Man, what a nice exit in Uber, with yesterday’s tag of 40.50 and a sharp reversal lower. Kudos longs!
Ideally we want $40 to $40.40 to get down to runners or out exit. Breakeven stops.
Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Relative strength leaders →
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Relative weakness leaders →
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Economic Calendar
