People Are Traveling, Not Trading

Volumes plummet amid short trading week.

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Our View

The world is in flux. 

Yesterday, Moscow ordered companies to reduce oil output in the second quarter to meet a production target of 9 million barrels per day (bpd) by the end of June. According to three industry sources, that’s in-line with its pledges to the producer group OPEC+. 

At the same time, China  warned the US that "the elephant in the room that will always shake the foundations of any attempts to build better relations, is the Taiwan question.” Any attempts to exploit the Taiwan question, which is an internal affair of China, will always call into question the US's sincerity and its commitment to mending relations. 

Houthi rebels in Yemen are said to have hypersonic missiles, while Israel’s deadliest foe, the Lebanese Hezbollah is at risk of an all-out war after the U.N. vote, and Israel called off meetings with the U.S. about Rafah, as relations grow more tense. I don’t think Xi would have thought in a million years that Putin would be bogged down in Ukraine over 2 years after the invasion while he is dealing with problems in his own backyard. Finally, China's economy is facing significant challenges, including declining property investment, accumulating debt risk, and weak consumption growth, all of which pose downside risks to China's growth trajectory in the near term. 

When you add all this up, it's not hard to see how the US could get caught in a wider, more risky war in Europe, Asia, or the Middle East. 

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MiM and Daily Recap

After down-ticking into Friday's futures close the ES sold off down to 5272.50 and opened Monday's regular session at 5276.75. After the open, the ES traded up to 5282.25, pulled back to the 5274.25 level at 9:46, rallied up to 5287.50 at 10:25, and then back-and-filled just below and above the VWAP from the 5379.75 level to the 5287.25 level until 1:52. Yes, you are reading this right, the ES hung in 4 to 6-point back-and-fill pattern until 1:26 when the ES traded up to 5288.75 at 2:23 and then sold off down to 5282.25 at 3:19 as the NQ went offered. 

The ES traded up to 5285.75 at 3:48 and traded TKTKTK as the 3:50 cash imbalance showed $1.8 billion to sell, traded down to 5275.75 at 3:56 and traded 5278.50 on the 4:00 cash close. After 4:00, the ES drifted up to the 5281.00 level and settled at 5280.75, down 9 points or -0.15%, while the NQ settled at 18,533.50, down 33 points or -0.18% on the session. Crude oil settled at $82.00, up 1.37% or +1.70% 

In the end, there are several reasons why the volumes have fallen so much, the first is the S&P and Nasdaq are up significantly over the last 22 weeks. The other is that it’s spring break and people are traveling — not trading. In terms of the ES's overall tone, it acted way better than the NQ. In terms of the ES's overall trade, volume was low: 178k traded on Globex, and 678k traded on the day session for a total of 856k. Sheesh!

Guest Post — Niels at Tradrr

Starting the profile from the beginning of march we have a fairly balanced or D-shaped profile built out for the month with German Unemployment Change and Rates reporting on Wednesday.

!. We have a clear tail rejection for higher prices that began the traversal lower after the first week of march ended following the induced rapid ascension with several prices of poor structure left behind as it did so.

The low volume area separating current prices from the POC has been a clear area of little to no trading formed and confirmed from the end of last weeks trading plummeting us to the prices that opened up march keeps section 2 as a major hurdle to get through as we move past the German Unemployment reports and into April.

With the European session having been closed with us more than half way through the major low volume area separating us from the months lows and opening up the possibility of traversing the D-shaped profile hinges on the report out of Germany on Wednesday to report either unchanged or lower to gain some bullish momentum on the curtails of the possibly trapped sellers below the low volume area back to the March POC, otherwise we begin the process of breaking down past the current months lows to establish some proper excess on readings higher than expected.

Economic Calendar

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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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