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Looking for the Fry-Day Rally
Danny Riley
January 12, 2024
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Our View
The PitBull told me a long time ago that you are only as good as your last trade. I want to assure you that while I hear a lot of stuff I always form my own opinion — as you should.
I am not here to tell you to buy or sell, I am here to provide a feel or the flavor of the markets; a feel that comes from working in the S&P pit for several decades. The other stuff you can get on Bloomberg or CNBC.
I knew the stats were not good going into Thursday and I also knew the CPI number could rock the boat, but instead of selling out my position at 4831.25 and making 100 points, I got stubborn. I easily could have sold out and waited for the pullback — and this is part of my weakness, because I am always thinking it will go further.
When the ES was going up and started reversing and I got all bulled up I got this direct message:
PITBULL : (9:51:14 AM) : u r too bullish be careful
He was telling me to get out because I was too bullish — and he was right, I was. I had several opportunities to get out but like many occasions when I get a good runner, I stayed too long.
There is an art to trading around a position and I froze today. Am I surprised by the drop? No, no, no.
Everyone was long and with stops below 4800, why not shake the tree and do some sell programs? That's what it's all about, surviving the raids. I'm long 1 es again. I think there is a good chance the low of the day is in and I say bring on the FRyday options expo just to feed the fire.
The good thing is I did get out at 4795.00 and while I did miss the short, I re-entered the long at 4783.25 on 1 es and I got this in the room:
IMPRO : Justbob : (12:46:36 PM) : Back on the Horse Dboy :)
Our Lean
I got overly bullish after a big push up and the CPI number rained on my upside party. But that was yesterday and today is the week-two FRYday options expiration that I have pushed for a rally all week.
I am not surprised by yesterday's fall. One of the patterns we have said exists is buying the 50-point drops and today we will see what the ES is made of. But we first have to get past the PPI number.
I am still thinking about a rip today. Buy the pullbacks and look for 4850-4860.
For those of you who like HandelStats levels, here they are:
Upside: Trade and hourly close above 4802 targets 4807.75, then settlement at 4814, hourly close above there targets 4826, then 4830.25. Hourly close above there targets 4833.25, then 4838.75, 1sd at 4839.98. Hourly close above 4841.24 targets 2weekly sd at 4864.96, 2sd at 4868.96 Hourly close above there targets 4870.80, then 3sd at 4891.94.
Downside: Trade and hourly close below 4800.98, targets 4795.12, then 4793, then 4789, -1 sd at 4788.02. Hourly close below there targets 4784.50. Hourly close below there targets 4769.62, then -2sd at 4762.04.
MiM and Daily Recap
The ES traded up to 4838.00 and sold off down to 4802.50 after the consumer prices rose 0.3% in December, higher than expected, pushing the annual rate to 3.4%. After the drop, the ES rallied back up to 4927.75 at 9:29 and opened Thursday's regular session at 4827.00.
After the open, the ES rallied up to 4832.25 at 9:36, dropped down to 4808.00 at 9:51, back-and-filled for the next 12 minutes then sold off down to a new daily low at 4786.25 at 10:00. After the low, the ES ground its way back up to the 4806.50 level at 10:32. The ES did a small back-and-fill and then sold off down to a new low at 4772.75 at 11:46 and again did a few upward back-and-fills and traded up to the 4801.00 level at 1:18. From there, the ES did a sideways-to-up back-and-fill and then traded up to 4812.50 at 2:00. After the rally, the ES pulled back to the vwap at 4804.00 and then rallied up to 4815.25 at 2:35, ripped up to 4820.75 at 3:00 and then sold off down to 4805.50 at 3:19.
From there, it rallied back up to 4814.50 as the early imbalance showed $74 million to sell. The ES traded 4810.50 as the 3:50 cash imbalance showed $418 million to sell, traded down to 4806.25, and then rallied up to 4818.25 at 3:58 and traded 4814.50 on the 4:00 cash close. After 4:00, the ES sold off down to 4810.75 and settled at 4812.00 on the 5:00 futures close, down 8.25 points or 0.13%.
In the end, the markets didn't like the CPI data. In terms of the ES's overall tone, it was weak in the first part of the day, rallied midday, and then had a late push-up. In terms of the ES's overall trade, volume was higher: 326k traded on Globex and 1.405 million traded on the day session for a total of 1.731 million contracts traded.
ES
Levels from HandelStats.com
Upside: Trade and hourly close above 4802 targets 4807.75, then settlement at 4814, hourly close above there targets 4826, then 4830.25. Hourly close above there targets 4833.25, then 4838.75, 1sd at 4839.98. Hourly close above 4841.24 targets 2weekly sd at 4864.96, 2sd at 4868.96 Hourly close above there targets 4870.80, then 3sd at 4891.94.
Downside: Trade and hourly close below 4800.98, targets 4795.12, then 4793, then 4789, -1 sd at 4788.02. Hourly close below there targets 4784.50. Hourly close below there targets 4769.62, then -2sd at 4762.04.
NQ
Upside: Trade and hourly close above settlement targets 16975.83, then 16997.75, 17003.50, 17008. Trade and hourly close above there targets 17030.50, hourly close above there targets 17084.75 and 17093, then 1sd at 17104.94. Hourly close above there targets 17117.12, then 17140.55, then 17153, 17165.25, hourly close above there targets 2sd at 17243.12.
Downside: Hourly close below 16945.75 targets 16908.50. Hourly close below there targets 16841.25, then -1sd at 16828.56. Hourly close below there targets 16804.75, then 1sd weekly at 16787.57, then 16723.25, then -2 sd at 16690.38.
Economic Calendar
