When Will The Trump Rally Stall?

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Our View

The market acted toppy, and why shouldn't it? Up six days in a row for a gain of over 320 points. Today, we have one economic report: the NFIB Optimism Index and some Fed speak from Fed Gov. Christopher Waller, Richmond Fed President Tom Barkin, and Philadelphia Fed President Patrick Harker. I still think there is a lot more upside, but my concern right now is the index markets being overextended. The main event this week is Wednesday's PPI report, which comes after the Fed cut rates last week, with another rate cut likely during the Fed's two-day meeting on December 17th and 18th.

MiM and Daily Recap

The ES rallied up to 6053.25 on Globex and opened Monday's regular session at 6052.00 After the open, the ES traded up to 6045.24 at 9:42, sold off down to 6029.00 at 10:27, rallied up to a lower high at 6043.50 at 10:42, sold off 10.25 points down to 5033.25 at 11:33, rallied 3 points up to 6039.50, and then sold off 26 points down to 6013.50 at 1:24. After the low, the ES rallied 16.75 points up to 6030.25 at 1:54, sold off 6.25 points down to 6023.25 at 3:12, and then rallied up 5.75 points to 6030.00 at 3:42. The ES traded 6025.00 as the 3:50 cash imbalance showed $514 million to sell, started to go bid, and traded 6032.00 on the 4:00 cash close. After 4:00, the ES traded down to 6025.00, did a small sideways grind, and settled at 6031.75, up 6.50 points or 0.11%. The NQ settled at 21,210.25, down 21 points or +0.10%, the YM settled at 44,419.00, up 278 points or +0.63%, the RTY at 2,447.60, up 35.20 points or +1.46%, gold futures fell 2.8% to $2,611.20 per troy ounce, the biggest one-day slide in more than three years, oil prices continued recent declines with Brent crude slipping 2.8% to $71.83 per barrel, Bitcoin surged above 87,000, the dollar strengthened, and the bond market was closed for Veterans Day.

In the end, the ES has been up six days in a row. In terms of the ES's overall tone, I was right about selling the open; the ES and NQ had just gone too far. In terms of the ES's overall trade, volume was low at 1.015 million contracts traded.

Technical Edge

• Fair Values for November 12, 2024

  • S&P 500: 25.87

  • NASDAQ (NQ): 102.32

  • Dow Jones: 142.18

• Daily Market Recap 📊

  • NYSE Breadth: 62% Upside Volume

  • Nasdaq Breadth: 71% Upside Volume

  • Total Breadth: 68% Upside Volume

  • NYSE Advance/Decline: 57% Advance

  • Nasdaq Advance/Decline: 56% Advance

  • Total Advance/Decline: 56.5% Advance

  • NYSE New Highs/New Lows: 433 / 29

  • Nasdaq New Highs/New Lows: 593 / 110

  • NYSE TRIN: 0.80

  • Nasdaq TRIN: 0.55

  Weekly Market 📈

  • NYSE Breadth: 62% Upside Volume

  • Nasdaq Breadth: 66% Upside Volume

  • Total Breadth: 64% Upside Volume

  • NYSE Advance/Decline: 78% Advance

  • Nasdaq Advance/Decline: 68% Advance

  • Total Advance/Decline: 72% Advance

  • NYSE New Highs/New Lows: 663 / 131

  • Nasdaq New Highs/New Lows: 899 / 361

  • NYSE TRIN: 1.18

  • Nasdaq TRIN: 0.95

  • VIX: 15.2

Guest Posts

Daniel Salguero - @tradrr.com

Hard to argue with the clear short-term direction in treasury futures, given the large set of recent bearish developments. It’s ideal to stay wary on longs until something fundamental shifts. Coming into this week, several Fed speakers will make appearances alongside CPI and PPI data. These could either push bonds down further or allow some reprieve, potentially filling the gap that started this week.

Room Summaries

Polaris Trading Group Summary - Monday, November 11, 2024

On Monday, November 11, 2024, PTG's trading session was characterized by a generally two-way rhythm, aligning with Cycle Day 2 expectations for consolidation and range-bound movements. David Dube ("PTGDavid") guided members through a primarily short-biased trading day with notable success on key trades, especially in the Nasdaq (@NQ) and S&P 500 (@ES).

Key Highlights:

• Early Short Trades: The session began with a successful short position in @NQ's Opening Range (OPR), which hit all targets, setting a bearish tone early on.

• Dynamic and Fixed Support/Resistance Levels: David identified a critical "Line in the Sand" (LIS) at 6040, with the level of 6025 also emerging as an important reference point as the day progressed.

• Market Structure and Reversal Plays: The "Look Above & Fail / Reversal" (termed "The Whiplash") was triggered, indicating a significant reversal setup, which was then reinforced by successful continuation trades at levels like AR10 and 3410.

• Range-Bound Conditions: As expected for Cycle Day 2, the market traded within a tight range with limited volatility. The bond market holiday contributed to a quieter session, with David advising patience to avoid overtrading.

• Afternoon Short Target Success: In the afternoon, David's target of 6025 was successfully hit, reinforcing the short plays. Lower targets of 6015 and 6010 were also achieved, exemplifying adherence to the Daily Trade Strategy (DTS).

Lessons and Insights:

• Patience in Low-Volatility Conditions: David emphasized the importance of not overtrading in a range-bound, low-movement environment. His guidance to wait for prime opportunities highlighted the value of disciplined trading.

• Effective Use of Initial Balance (IB) Levels: The Initial Balance served as a critical reference for counter-response trades, with David authorizing “long probes on dips” in alignment with Cycle Day 2's typical back-and-forth action.

Closing Remarks: The day’s strategy aligned well with the DTS plan, ending with a Market-On-Close (MOC) sell imbalance and reflecting normal Cycle Day 2 rhythms. David noted that a positive price level above 5990 for Cycle Day 3 could support a potential 3-day rally.

• U.S. Markets Rally: The S&P 500 closed above 6,000, and the Dow surpassed 44,000, marking record highs. However, the Nasdaq 100 stayed flat as tech giants Nvidia (NVDA), Apple (AAPL), and Meta (META) weighed on the index. Tesla (TSLA) soared 8%, reaching two-year highs and crossing a $1 trillion market cap, fueled by ongoing optimism about a potential Trump presidency.

• Crypto Surge: Bitcoin surged 30% post-election, trading above $89,000, with market expectations for it to cross $100,000 by year-end. Coinbase (COIN) and Robinhood (HOOD) rose in parallel with Trump’s promise of a “strategic national bitcoin stockpile,” energizing the sector.

• China Market Drop: The Hang Seng China Enterprises Index fell 3.1%, with the yuan hitting a 3-month low. Anticipation around Trump’s aggressive China policies, including potential tariffs and the appointments of Rubio and Waltz, spooked investors.

• Upcoming CPI and Fed Moves: The October CPI release on Wednesday is seen as the next test for market resilience. Fed Chair Jerome Powell avoided comments on potential Trump policy impacts on Fed decisions.

• Earnings and Economic Calendar: Earnings releases include Home Depot, AstraZeneca, and others. The economic calendar is light, with Fed speakers scheduled, including Kashkari’s interview on Yahoo Finance at 2:00 PM ET.

• Volatility & Technical Levels: Volatility is contracting as the S&P nears highs, with the ES (E-mini S&P) consolidating above recent support levels. Traders are eyeing support at 6018/21s and resistance around 6057/60s. Whale bias remains short heading into the U.S. open.

Economic Calendar

Earnings Today:

Full 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!