S&P Consolidates as Bulls Wait for Next Move

Is a rip brewing?

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Our View

If there’s one that’s for sure in the S&P futures, it's that the markets will always go up and down — but the question is, by how much? 

When you look back, during the credit crisis was the first time I saw a lot of 100-point moves. After that, the ranges shrunk down to 40 to 60-point ranges and then back to what we are seeing now, 30-point ranges. After the COVID-19 pandemic, the ranges expanded again; they went from 100+ point ranges all the way up to to 400-point ranges. After that they shrunk down to 60 to 80 point ranges, then to under 50 points, then to where we are today— back at 30-point ranges. 

I think this happens because the market goes into some type of rebuilding/repairing process after a big move. They need to drop, and pop, and back and fill. I never knew about back-and-filling on the floor. Sure I could see a chart, but not like today’s charts if you learn how to look for it. 

The first part is, back-and-fill patterns can be 30 points (like they are today) or 100 points (like in a more volatile tape), but either way recognizing them can make a big difference. Once the ES finds a bottom and starts moving back up — like the current rally — they sometimes fall into these lumbering narrow ranges and in most cases that's a positive for the bulls. 

I could never see that in the pit, but one of the most basic chart formations is back and filling. If you can learn to recognize this type of pattern — both long and short term — and it matches up with your support, it can be a very accurate tool for buying the dips and making some great entries. 

Personally, I depend on this for my ES entry levels and have found that on days when you have tight ranges, the drop under the VWAP could only be by 3 or 4 points. On other, more volatile occasions, the ES could drop 8 to 12 points under the VWAP. 

If I see small buy imbalances showing up in the NQ, I buy the ES right away and put in a stop. If I catch it right, I usually make 6 to 10 points quickly. But if they pop back above the VWAP, I’ll try and save a few contracts and trail a stop. 

Like I said, it’s very basic pattern recognition, but it works for me and I think for a lot of others too. 

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 15-min recap

The ES traded down to 4555.50 on Globex and traded 4562.00 on Tuesday's regular session open. After the open, the ES made a high of 4564.50, dipped to a low of 4558.25 at 9:43, and then rallied up to 4574.25 at 10:00 after the ISM number was released.

After a brief hesitation, the ES traded up to 4579.75 at 10:05, then sold off to the VWAP at 4566.75 at 10:29, traded up to 4585.50, broke down to 4565.25, rallied back up to 4565.50 at 11:40 and then dropped down to 4563.00. From there, it rallied back up to 4574.00 and then dropped down to 4561.75 at 12:47. 

After the low, the ES rallied back up to 4575.50 at 1:29, then traded down to 4568.50 at 2:06, and then rallied up to a new high at 4577.50 at 3:25, and traded 4573 as the 3:50 cash imbalance showed $2.1 billion to sell and traded 4576.50 on the 4:00 cash close. After 4:00, the ES traded 4578.50 and settled at 4573.25 on the 5:00 futures close, down 1.50 points or 0.03% on the day. 

In the end, the markets were firm, but it was some very rough trade. In terms of the ES’s overall tone, the ES and NQ were firm. In terms of the ES's overall trade, volume was steady: 257k traded on Globex and 1.38 million traded on the day session for a total of 1.637 million contracts traded.

Technical Edge

  • NYSE Breadth: 22% Upside Volume 

  • Nasdaq Breadth: 34% Upside Volume 

  • Advance/Decline: 30% Advance 

  • VIX: ~13.00

S&P 500 — ES Futures

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Guest Post

PTG / Taylor 3 Day Cycle

Author: David D Dube’ (a.k.a. PTGDavid)

Prior Session was Cycle Day 1 (CD1):  Normal CD1 as price declined establishing a cycle low at 4555.50. Prior range was 30 handles on 1.777M contracts exchanged. 

 …Transition from Cycle Day 1 to Cycle Day 2

This leads us into Cycle Day 2 (CD2): No structural change in dynamics, as price remains confined to multi-day composite range. Key parameters are unchanged at 4555 - 4575. We remain committed to managing risk and not overtrading  these rhythms, until a more directional lean unfolds. As such, scenarios to consider for today’s trading.

Bull Scenario: Price sustains a bid above 4575, initially targets 4590 – 4595 zone. 

Bear Scenario: Price sustains an offer below 4555, initially targets 4535 – 4530 zone.

PVA High Edge = 4577       PVA Low Edge = 4567         Prior POC = 4557

*****The 3 Day Cycle has a 91% probability of fulfilling Positive Cycle Statistics covering 12 years of recorded tracking history.

For more detailed information for both bullish and bearish projected targets, please visit: PTG 3 Day Cycle and/or reference the Cycle Spreadsheet below:

Link to access full Cycle Spreadsheet  > > Cycle Day 2 (CD2)

Thanks for reading,

PTGDavid

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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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