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T+2 In Effect as Quarter-End Nears
The S&P has had a nice rebound, but is it about to run out?
Danny Riley
June 29, 2023
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Our View
I don't know about you, but June seemed like a very long month to me. From Thursday June 1st low to the high on June 16th, the ES rallied 272 points. Then at the recent low (on Monday) the ES was down 125 points.
In other words, it's very much holding the trading range. Like I have said many times, I am a cautious bull and I still think the real money trade is long.
According to the Stock Trader Almanac, July is the best month of the third quarter, “however the mostly negative results in August and September tend to make the comparison easy.”
The start of Q3 and the second half of the year brings in inflows from retirement funds. The first trading day of July has the Dow up 27 of the last 33 occasions and the ES up 29 of the last 33. Additionally, big July gains usually provide better buying opportunities over the next 4 months but — and there is always a but — it also starts the worst four months for the Nasdaq. Remember, the Nasdaq has been a major leader in the overall market rally this year.
Also remember that Monday is a shortened trading day because of the July 4th holiday.
Our Lean — Danny’s Trade
This is Danny Riley’s personal trading plan for the day.
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MiM and Daily Recap
The ES sold off down to 4406.25 on Globex and opened Wednesday's regular session at 4406. After the open, the ES traded down to 4399.25, back-and-filled for the next 30 minutes, traded up to 4420.50 at 10:52 and sold back down to the 4409.25 level. After that, the ES blasted up to 4430.25 at 12:20, then traded back down to 4400.75 at 12:55. As they say: Run the buy stops, then run the sell stops.
After the low, the ES rallied back up to 4415, pulled back to 4405.75, rallied up to 4416, traded back down to the 4401.50 level at 3:08, rallied back up to 4414 at 3:36 and then traded back up to the VWAP at 4412 at 3:45. The ES traded 4410.25 as the final 3:50 imbalance showed $2.4 billion to sell and traded all the way up to 4419.50 on the 4:00 cash close. After 4:00, the ES traded up to 4425.75 at 4:03 and settled at 4422.75 on the 5:00 futures close, down 1.25 points or about flat on the day.
In the end, the ES had a 31 point range up until the 4:00 cash close. In terms of the ES’s overall tone, it was ok but not great. In terms of the ES’s overall trade, volume was steady at 1.62 million contracts traded.
Technical Edge
NYSE Breadth: 56% Upside Volume
Advance/Decline: 55% Advance
VIX: ~$13.50
Traded a recent low of $12.73. That’s the lowest it’s traded since pre-pandemic in early 2020 (i.e. with stocks at ATHs)
SPY
Testing into the $437.50 area now, which has been resistance and is the 50% retracement.
SPY is trading near Wednesday’s HOD in the pre-market. An open near this mark and failure to hold it could create a quick cash-flow short. Otherwise, daily-up could open the door to $439.
That’s the gap-fill level and the 61.8% retracement.
Pivot: $437.50
Upside Levels: $439, $441, $443.50
Downside Levels: $434.50, $431.50, $429 to $430
Open Positions
Bold are the trades with recent updates.
Italics show means the trade is closed.
Any positions that get down to ¼ or less (AKA runners) are removed from the list below and left up to you to manage. My only suggestion would be break-even (B/E) or better stops.
** = previously mentioned trade setup we are stalking.
Open Positions
Down to Runners in GE, CAH, LLY, ABBV, AAPL, MCD & BRK.B. Now Add META, AVGO, UBER, CRM, AMZN and CVS.
Current: 4 longs, 2 shorts.
Go-To Watchlist
Feel free to build your own trades off these relative strength leaders
Relative strength leaders → (List is growing long!)
Economic Calendar
