S&P 500 meets "sell the news"

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Our View

There are no shoulda, woulda, coulda’s in trading — you are either right or you are wrong. 

I was not only wrong, but I was dead wrong. I came in long the ES from 5330.50 on Wednesday after Nvidia’s earnings and I watched them climb all the way up to the high at 5368.25. 

I said in Our Lean that I could not rule out selling the open, but I didn't. I knew when I put the number of up days in May in the Opening Print that the ES was extended and I didn't react. Instead of getting out I continued to buy on the way down. This is what happens when I don't listen to myself. 

After a wild day of being down big on Wednesday and making it all back I threw in the towel and told my chat that I was done for the day and would not return until after Memorial Day. Had I not done that I would have got totally killed. 

My best trade was getting away from the screens. 

Here is something that stuck in my head…it was a post from PitBull after NVDA reported and after the pop up, his post said: PITBULL: (Wed:4:28:32 PM): don't fuck with me sell the news. 

Our Lean

I have never listened to anyone. 99% of the Opening Print is my view of the markets, but I have been listening to some other peoples’ views lately and I have to own that. Could I have made a lot of money had I sold the open? Yes, but I like buying the falling knives one way or the other. I would have gotten out and started to buy — which I did — but I had a gut feeling that things were going to get bad so I stepped back. 

I am not a quitter, but I am 100% positive I would have racked up much larger losses had I not gotten away from the screens to clear my head. My best trade is trading the gap and I choked and I didn’t listen to the PitBull. 

Our Lean: I can't say the upside is over, but I can say there is a good possibility. We could see some type of push back up, but I'm not sure it will hold. The 50% retracement  from the Globex high to the day session low is 5321. 

I'm sorry but I need a few days away from the screens. I have written the Opening Print in various forms since 1994, that is a 30-year run and I can’t lie: I'm not superman and I am burned out. I told the PitBull that on Tuesday and he said to take a few days off, too bad I didn't take his advice. 

MrTopStep Levels:

MiM and Daily Recap 

ES Recap 15-min

After a tumultuous close on Wednesday, the ES rallied up to 5368.25 on Globex and opened Thursday's regular session at 5357.50. After the open, the ES traded 5358.25 at 9:35 and then dropped 13 points down to 5345.25 and then made five lower lows: 5343.75 at 9:38, 4340.75 at 9:43, 5340.25 at 9:45, 5338.00 at 9:45, 5333.75 at 9:49 and then 5322.25 at 9:45. From there, it back-and-filled then popped up to 5333.00, and dropped down to 5322.50 at 10:04. 

After the low, the ES rallied back up to 5337.25 at 10:17, sold off to a higher low at 5324.50 at 10:23, rallied back up to 5336.25 at 10:42 and then dropped down to 5316.75 at 11:00 and rallied back above the VWAP up to 5342.25 at 11:58. After the high, the ES made its way all the way down to 5276.25 at 2:33 — a 66 point drop — and then rallied up to 5290.00. From there, the ES sold off down to the low of the day at 5273.50 at 3:12, a 68.25 points drop off the 5342.25 high at 11:58 and an 84.75 point drop off the 5358.25 high of the day. 

After the low, the ES rallied back up to 5289.25, traded 5283.50 as the 3:50 cash imbalance showed $3.5 billion to buy and traded 5286.25 on the 4:00 cash close, down 41.50 points or -0.70%. The NQ that made its Globex high at 19,023 and sold off down to 18,621.50, a 402.50 point drop and settled at 18.860.50, down 100.25 points or -0.50%. The YM got totally crushed, and dropped 1.5% — its worst one-day percentage drop since March 2023. The yield on the 10-year note rose to 4.474%, from 4.433% on Wednesday and gold futures pulled back 2.3% in their third consecutive day of declines and copper futures fell about 1%, coming off their biggest one-day percentage decline in almost two years.

In the end, all the buying was used up on Globex. In terms of the ES's overall tone, it was a wash out. In terms of the ES's overall trade, volume was the highest since May 1 at 1.938 million contracts traded.

Technical Edge  

  • NYSE Breadth: 13% Upside Volume (!)

  • Nasdaq Breadth: 52% Upside Volume 

  • Advance/Decline: 15% Advance (!)

  • VIX: ~12.50

Guest Post — SpotGamma

SpotGamma is one the the shining stars of the options markets. If you have never heard of them or already know of them and have never signed up for their options flow products or the SG Academy, I fully suggest you check them out and add them to your trader’s toolbox.

Here’s a snippet from them:

Contextually, what did not help equities, and very likely contributed to the rejection of new all-time highs leading to what are now yellow-light market conditions at best, is that we only opened in neutral market gamma [yesterday] (SG Gamma Index™ = 0.450).

How can that happen, you might ask, sailing into all-time-highs? The options market is heavily invested in 5300 as a symmetrical pin. With the market closing where there is almost the same amount of positive and negative market gamma, there is not enough sticky index call gamma to enforce mean-reverting conditions. 

Last night we were outlining how 5300 was critical support given that all Combo bars underneath it were negative, on top of lining up with the VT at 5295. However, now there is a complication to that because we saw the Put Wall rise to 5200. Absolute Gamma shows this to be a strong level (high magnitude) and so at this point we can demote critical support to 5200.

Economic Calendar

For a more complete Economic Calendar see:

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!