We Need a Pullback to Set Up Some Buying Opportunities

Bulls should be asking for a dip

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Our View

Want an idea? I think you trade less and pick your spots better in December. 

There are a lot of reasons for saying this, but my main reason is, I have seen a lot of customers lose money in the last month of the year. Accounts that were either up a little or down a little start pressing bets — and then they lose. 

I know a lot of traders — me included — think there could be weakness in the first two weeks of December. Frankly, it would be good if there was some weakness! However, the ES has quickly come off its high by 50 points, while the DAX continues to power higher and remains within spitting distance of new highs. 

I guess what I am saying is, even if the ES does selloff, it won’t do it without some bounces.

The market is trading well, but I did find this article interesting: JPMorgan predicts a grim outlook for the stock market next year.

Of note: “The sizable rally in the U.S. stock market over the past month is likely to fizzle out by the end of next year amid a number of growing economic headwinds, according to JPMorgan Chase.”

"Absent rapid Fed easing, we expect a more challenging macro backdrop for stocks next year with softening consumer trends at a time when investor positioning and sentiment have mostly reversed," Lakos-Bujas wrote in the note.

“The benchmark index could fall to 4,200 by the end of 2024 — down about 8% from current levels, according to the JPMorgan strategists. It is the most bearish outlook yet among major Wall Street firms.”

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 down to 4563.00 on Globex and traded 4566.00 on Monday's regular session open. After the open, the ES rallied up to 4578.50 at 9:54 and then sold off down to a new low at 4553.50 at 11:02. After the low, the ES traded up to a new high at 4577.75 at 1:01, pulled back to the 4565.00 level at 2:10 and then back-and-filled in a 5-point range until 3:41. 

From there, the ES traded up to 4576.50 at 3:49 as the early MIM showed $562 million to buy. The ES traded 4575.75 as the final NYSE stock imbalance showed $2.6 billion to buy, traded up to 4579.75, and traded 4576.75 on the 4:00 cash close. After 4:00, the ES eased lower and settled at 4572.50 on the 5:00 futures close, down 24.25 points or 0.54% on the day.

In the end, the ES was moving but it was slow. In terms of the ES's overall tone, it was weak but popped up a bit after the MIM showed $2.6 billion to buy. In terms of the ES's overall trade, volume was decent: 328k traded on Globex and 1.423 million traded on the day session for a total of 1.751 million contracts traded.

Technical Edge

  • NYSE Breadth: 48% Upside Volume 

  • Nasdaq Breadth: 63% Upside Volume 

  • Advance/Decline: 49% Advance 

  • VIX: ~13.00

    • ^^Very mild breadth numbers and muted VIX given yesterday’s “dip.”

S&P 500 — ES Futures

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ES 

Levels from HandelStats.com

ES Daily

  • Upside: Trade and hourly close above 4559.50 targets 4563 then 4566.50. Trade and hourly close above there targets settlement 4573.25. Hourly close above there targets 4578.62 then 4581.12. The ES MUST have a DAILY close above here to regain the uptrend. Above there targets 4587.50, then 4591.50 then 4595.50 then 1sd 4599. hourly close above there targets 2sd 4624.81. ABOVE THERE IT'S OFF to the RACES.

    Downside: Trade and hourly closes below 4559.50 target 4556.74 then 4551.75. Hourly close below ther targets -1sd 4547.47 then weekly sd 4546.19. Hourly close below there targets -2 sd 4521.69, Hourly close below 4520.50 targets 4510.75 then - 3sd 4495.91.

NQ 

NQ Daily

  • Upside: Trade and hourly close above 15781.25 targets 15804.50 then 15827.75  trade and hourly close above there targets settlement 15860. Hourly close above there targets 15904.38. DAILY CLOSE above there turns the uptrend back on. 15963.25 next target. Hourly close above there  targets 15972 then 15981. Hourly close above there targets 1 sd 16003.87. Hourly close back above 16050.40 ignites the uptrend into the end of the year.

    Downside: Trade and hourly close below 15781.25 targets 15746.88 then -1 weekly sd and -1 sd 15716.13. Hourly close below there targets 15701.25 trade and hourly close below there targets 15582.25 and -2 sd 15572.27.

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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