Year-End Rally Gaining Momentum

CPI and Retail Sales on tap this week

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Our View

Well, I had it right about selling the open and the early rally, but I didn't catch the rip — although @TheRealTraderDave from the MTS chat did and he totally killed it. 

I could kick myself because, after the low and subsequent pop, I tried to sell it a few times and gave up. That is not something I generally do, but I had a decent week and didn't want to chase.

I also did not think the ES would rally almost 70 points, but that's the great thing about the MTS trading room…if I don't have it right, someone else does. It truly is a collective of great traders that are all sharing.

This week has a busy economy and earnings schedule. It will be a test of consumer spending as we go into the holiday shopping season. Tuesday starts out with the October Consumer Price Index (CPI) report, which traders will be paying close attention to after last week's Fed speak about future rate hikes. 

Wednesday is the October retail sales number, which is a key read on the state of the consumer. It is also a big week for earnings. Some of the big-box retailers reporting this week include: Home Depot (HD), Target (TGT), and Walmart (WMT), Macy's (M), TJX Companies (TJX), and BJ's Wholesale (BJ).

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 up to 4383.00 at 9:00 am on Globex and traded 4383.75 on Friday's regular session open. After the open, the ES traded down to 4372.25, traded up to 4386.50 at 9:46 and then sold off to a double bottom at 4367.75. It was that low that set off the ~68-point rally. 

The ES rallied up to 4378.00, made one last downtick under the VWAP at 4373.50 and then made 8 new highs in a row: 4393 at 11:10, 4399.00 at 12:13, 4410.75 at 12:29, 4411.75 at 12:46, 4414.50 at 11:56, 4222.00 at 1:51, 4423.50 at 2:25, 4424.00 at 2:52, 4430.25 at 3:40. The ES traded up to 4433.00 at 3:48 as the early imbalance showed $234 million to buy and traded 4431.00 as the 3:50 cash imbalance showed $2.1 billion to buy and traded 4435.50 on the 4:00 cash close. After 4:00, the ES remained in a tight range and settled at 4424.50 on the 5:00 futures close, up 68.25 points or 1.56% on the day. 

In the end, the only real sale was off the open. After that, it was all buy stops and buy programs. In terms of the ES's overall tone, it was extremely firm. In terms of the ES's overall trade, volume was steady: 264k traded on Globex and 1.398 million traded on the day session for a total of 1.642 million contractsde

Technical Edge

  • NYSE Breadth: 69% Upside Volume 

  • Nasdaq Breadth: 62% Upside Volume 

  • Advance/Decline: 73% Advance 

  • VIX: ~15

S&P 500 — ES Futures

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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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