Rally Is Stalling, but Upside Risk Remains

The PCE report could move markets

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Hey, it’s me Danny. I’m back!

Sometimes you have to decompress from trading every day. I was going to take the whole week off, but I felt bad that I broke a 31-year streak of writing the Opening Print and I wanted to get short. I sold 5087.50s and I have offers in above there. In other news, Bitcoin surged to $64,000 yesterday, Tesla gained +1%, while the rest of big tech — Microsoft, Apple, Nvidia, Alphabet, Meta and Amazon — all fell. The VIX climbed +1.5% and TLT gained 0.6%. The point? Everything is moving ahead of today's economic releases. 

The PitBull thinks this could be the beginning of a pullback. He didn't say how much, but he did say many of the stocks he watches have gone too far and are overdue for pullbacks. You know how I always say no one knows where the S&P is going for sure? Well, I am not going to name them, but many of the well-known market timers have been saying “sell, sell, sell” for months. I think when it comes down to it, we will know that something has changed and I don't know if it's going to be an economic problem or something like the US is fighting wars on multiple fronts.  

There are a host of things that potentially could cause a larger decline, but right now the US stock market continues to make good of the bad news. If today's PCE report — the Fed’s preferred inflation gauge — comes in hot, it could put the Fed's rate cuts on hold even longer.   

Our Lean — Danny’s Trade

This is Danny Riley’s personal trading plan for the day.

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MiM and Daily Recap

After trading up on Tuesday's close, the ES sold off down to 5063.25 on Globex and opened Wednesday's session at 5072.25. After the open, the ES traded down to 5068.75 at 9:34, traded back up to 5077.25, sold off down to a new low at 5068.50 and then rallied up to 5087.75 at 11:09. From there, it did a small back-and-fill, made a lower high at 5078.25 and then sold off down to a higher low at 5073.50 at 12:42. After the pullback, the ES  back-and-filled under the VWAP, rallied up to 5087.25 at 1:45 and then reversed back down to the 5071.00 level at 3:03 and then back up to the 5082 level at 3:04. 

From there, the ES pulled back to the 5074.25 level and traded 5077.00 as the 3:50 cash imbalance showed $1.89 billion for sale and traded down to 5072.25 and traded 5080.25 on the 4:00 cash close. After 4:00, the ES sold off down to a new day low at 5066.25, just 2.5 points below where it opened and settled at 5071.50, down 9 points or 0.18% on the day. 

In the end, it was another day of failed rallies and low volumes. In terms of the ES’s overall tone, it was weak but still holding the lower band of support at the 5060-5070 level. In terms of the ES's overall trade, volume was low: 206k ES traded on Globex, and 927k traded on the day session for a total of 1.133 million contracts traded.

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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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