Low Volume Let's Algos Run Wild

Monday was a good example

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Our View

My call to buy the 15 to 25-point dips worked yesterday, but the ES and NQ got hit by a wave of sell programs after 2:00 when the Treasury funding announcement headline hit the tape.

Sometimes I just think there is too much to keep up with and I have no idea how or why an announcement about a future Treasury auction could have such an impact, but when the volumes are so low, it seems like the algos will lock on to any headline. 

Most of the early tech weakness came from NVDA when it sold off into 10:00 when it dropped $20.00. But then it recovered and made a new high for the day at $879.92 after the 4:00 cash close. TSLA zoomed higher by more than 15% after Elon Musk made headway in China for the rollout of the company’s “FSD” autonomous driving service. And the benchmark 10-year yield drifted downward Monday to 4.612%, but remains 0.752 percentage points higher since the beginning of 2024 (up about 16% YTD). 

All in all, it was not a bad day for the markets.

Our Lean — Danny’s Trade

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MiM and Daily Recap

ES Recap

The ES traded up to 5146.60 on Globex and opened Monday's regular session at 5147.25. After the open, the ES traded up to 5149.50, pulled back to 5146.25, and then rallied up to 5154.25 at 9:35 and then sold off down to 5142.75 at 9:41, up-ticked and then sold off down to 5136.75 at 9:45. Over the next 50 minutes, it chopped its way back up to the 5153.25 level at 10:35, pulled back to 5142.00 at 10:48, rallied up to 5147.25 and sold off down to a new low at 4136.50 at 11:42. After the low, the ES rallied up to the VWAP at 5150.00 at 12:40, pulled back to the 5142.50 level at 1:15, rallied up to 5152.00 at 1:50, back-and-filled just above and below the VWAP for the next 33 minutes and then quickly sold off down to 5132.25.

After the bond auction, the ES rallied up to 5143.50 at 3:00, dropped down to 5130.75, up-ticked to 5136.00 and dropped again down to 5118.75 at 3:07 and then rallied up to 5135.00 at 3:23. After the pop, the ES pulled back to 5130.50 at 3:29 and then rallied up to 5138.00 at 3:48 and traded 5134.75 as the 3:50 cash imbalance showed $1.48 billion to buy, rallied up to 5147.00 and traded 5147.25 on the 4:00 cash close. After 4:00, the ES traded up to 5151.50 and settled at 5147.25, up 15.75 points or 0.31%, the NQ settled at 17,912.00, up 66.25 points or 0.37%.

In the end, despite that gap stats saying not to sell (I did) it was a total chop. In terms of the ES overall tone, it was firm. In terms of the ES's overall trade volume was low: only 167k traded on Globex and 963k traded on the day session for a total of 1.13 million contracts traded. 

Technical Edge

  • NYSE Breadth: 69% Upside Volume 

  • Nasdaq Breadth: 65% Upside Volume

  • Advance/Decline: 71% Advance

  • VIX: ~15

S&P 500 — ES Futures

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Guest Post — Niels from Tradrr

To learn more about Tradrr, please visit here

Tech Earnings continue on this week alongside other events that will prove "interesting” for the market to listen in on. Having added AMZN into the Dow jones near the end of February after its previous earnings results could give a boost to the Dow to fuel a direction out of a recent balance formed over the course of this month to set up the next month.

Majority of April spent drifting downwards with a heavy week from the 8th-12th as CPI came out higher than expected adding to fears of continued hawkishness out of the Fed and the expected 2 expected rate cuts to be spoken on this Wednesday, should their tune indicate any change to the thoughts weighing on participants minds we could aim to see this zone tested and filled out.

Balance and patience the name of the game when awaiting market moving events was maintained last week through earnings out of the Tech sector establishing the boundaries therein to gauge for potential breakouts and low volume areas to fill out when we do on either side.

Aided out of the hole Friday the 19th with lows made in the overnight session and guarded during the pit hours with pre-market reports from AXP aiding to add on a 1.4% gain to the financial sector keeping the Dow from sinking to overnight lows though a weak signal of strength with the monthly low made in the Globex session going into May.

Economic Calendar

For a more complete Economic Calendar see: https://mrtopstep.com/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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