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ES NQ Futures Trading
- Thread starter Jahajee
- Start date
"The S&P has put together a decent short term leg off Wednesday's low/support (50% retrace of late March-June run, channel) to test its June low at 888 (session high 887.86) and if able to hold near the retracements of this run/congestion at 878 and 875/874 there is potential for follow through recovery gains. If this does develop, given the generally weaker bias of the last month, the index will have to prove it more than just a limited correction of the decline off last week's high with sustained gains through 893 (H-N-S neckline, 38% retrace of 931/869) and 899/900 (50 day ema/50% retrace)."
"July Almanac
Though July is the beginning of NASDAQâs Worst Four Months it has been the best month of the third quarter, which is somewhat of a dubious honor. The first half of the month is generally stronger and July often gets creamed in the second half when a bear market is in progress. Whether we are actually in a bear market again, only time will tell.
The first trading day is quite strong, with the Dow up 17 of the last 20, but extreme market volatility often takes hold after the Fourth of July. Post Independence Day markets have seen huge gyrations both up and down. Expiration week has been a mixed bag with a memorable 7.7% Dow loss in 2002 and an equally memorable 3.6% gain last year. The week after has been atrocious with the Dow down 7 of the last 11 years with some big losers. If it wasnât for the 3+% gains in 2002 and 2006, the average would be a lot worse than -0.9%. Itâs safe to say, investors should be on their toes in July or better yet on the sidelines."
Though July is the beginning of NASDAQâs Worst Four Months it has been the best month of the third quarter, which is somewhat of a dubious honor. The first half of the month is generally stronger and July often gets creamed in the second half when a bear market is in progress. Whether we are actually in a bear market again, only time will tell.
The first trading day is quite strong, with the Dow up 17 of the last 20, but extreme market volatility often takes hold after the Fourth of July. Post Independence Day markets have seen huge gyrations both up and down. Expiration week has been a mixed bag with a memorable 7.7% Dow loss in 2002 and an equally memorable 3.6% gain last year. The week after has been atrocious with the Dow down 7 of the last 11 years with some big losers. If it wasnât for the 3+% gains in 2002 and 2006, the average would be a lot worse than -0.9%. Itâs safe to say, investors should be on their toes in July or better yet on the sidelines."
"Welcome to âWeird Wally Wednesdayâ (in honor of Don Wolanchuk who first pointed this time frame out).
Weird Wally Wednesday is the Wednesday before option expiration week and on this day and the next couple of
days, the market has know to do unusually moves. Therefore expect the unexpected from today into the first day
of option expiration week. From our experience is one of the most unreliable periods for success for short term
trading. Moving on to the SPY, we have expected another hump on the Right Shoulder to make this pattern
symmetric to the two hump left shoulder. There is no âLawâ that says that the second hump of the Right
Shoulder has to form but there are probabilities that is should. An ideal time for a bounce to start is now (the
second chart in this report will show why). There is a gap between 7/1 to 7/2 near 91 on the SPY the there is a
chance the market could rally back to that area and finish the Right Shoulder and complete second hump and
complete the H&D. If and when the SPY rallies back to the gap level near 91 we would like to see the Volume
drop at least 10% on the gap test to show that the gap has resistance. In other words, we would like to see the
Volume drop to 191 million shares or less on the SPY on the test the gap level as that would add to the bearish
picture. If the gap is tested on 10% lighter volume that would be the best time to add to short positions. Again
there is no âLawâ that the market will rally one more time to make the second hump of this Right Shoulder. The
daily and weekly Momentum indicators have turned down and we expect this decline to last into August. This
H&D has a downside target near 82 and a 50% retracement of the rally from the March low would give a target to
the 81 level. We have another down side target near 74 that is also a possibility. We will see how the pull back
unfolds in the weeks to come. We are short the SPX at 883.92."
Weird Wally Wednesday is the Wednesday before option expiration week and on this day and the next couple of
days, the market has know to do unusually moves. Therefore expect the unexpected from today into the first day
of option expiration week. From our experience is one of the most unreliable periods for success for short term
trading. Moving on to the SPY, we have expected another hump on the Right Shoulder to make this pattern
symmetric to the two hump left shoulder. There is no âLawâ that says that the second hump of the Right
Shoulder has to form but there are probabilities that is should. An ideal time for a bounce to start is now (the
second chart in this report will show why). There is a gap between 7/1 to 7/2 near 91 on the SPY the there is a
chance the market could rally back to that area and finish the Right Shoulder and complete second hump and
complete the H&D. If and when the SPY rallies back to the gap level near 91 we would like to see the Volume
drop at least 10% on the gap test to show that the gap has resistance. In other words, we would like to see the
Volume drop to 191 million shares or less on the SPY on the test the gap level as that would add to the bearish
picture. If the gap is tested on 10% lighter volume that would be the best time to add to short positions. Again
there is no âLawâ that the market will rally one more time to make the second hump of this Right Shoulder. The
daily and weekly Momentum indicators have turned down and we expect this decline to last into August. This
H&D has a downside target near 82 and a 50% retracement of the rally from the March low would give a target to
the 81 level. We have another down side target near 74 that is also a possibility. We will see how the pull back
unfolds in the weeks to come. We are short the SPX at 883.92."
interesting take....
---------------------------------
McMillan Market Commentary
Thursday, July 9th, 2009
The bears finally seized their opportunity once resistance held at 930,
and they have forced $SPX all the way down to the bottom of its wide
880-950 trading range. In fact, it broke down through the bottom of
that range intraday on Wednesday, but a late rally prevented $SPX
from confirming the breakdown on a closing basis. We consider it
necessary for $SPX close decidedly below 880 in order to confirm a
downside breakout. Meanwhile, if the bulls can manage to pull off a
rally from here, it would likely run into resistance in the 900-910 area.
The equity-only put-call ratios continue to rise and are thus still
on sell signals. Since they started from such a low point on their
charts, they have a long way to roam on the upside before we would
consider them "oversold."
Market breadth turned decidedly negative in the last week, as the
market sold off
but have now reached oversold status. However, "oversold" does not
mean "buy." So until these generate true buy signals -- which they
would do with one more day of advances leading declines -- we
consider them as still being on sell signals.
*********************************************************
Join me, Lawrence G. McMillan, at my own full-day Intensive Option Seminar
on Saturday, November 7th, 2009, in New York. http://www.optionstrategist.com/products/seminars
*********************************************************
Volatility indices moved higher this week. Once again, $VIX has
broken up through the downtrend line that has defined its intermediate-
term decline since the March $SPX lows. If $VIX truly does break out
on the upside, that would be negative for the stock market. A close
below 29 would return $VIX to a bullish indicator.
In summary, the bulls may attempt a rally here, but we would not
expect it to be particularly robust -- probably just enough to work off
the oversold condition in the breadth oscillators. Thereafter, unless the
indicators quickly change, we expect a downside breakout to occur.
---------------------------------
McMillan Market Commentary
Thursday, July 9th, 2009
The bears finally seized their opportunity once resistance held at 930,
and they have forced $SPX all the way down to the bottom of its wide
880-950 trading range. In fact, it broke down through the bottom of
that range intraday on Wednesday, but a late rally prevented $SPX
from confirming the breakdown on a closing basis. We consider it
necessary for $SPX close decidedly below 880 in order to confirm a
downside breakout. Meanwhile, if the bulls can manage to pull off a
rally from here, it would likely run into resistance in the 900-910 area.
The equity-only put-call ratios continue to rise and are thus still
on sell signals. Since they started from such a low point on their
charts, they have a long way to roam on the upside before we would
consider them "oversold."
Market breadth turned decidedly negative in the last week, as the
market sold off
but have now reached oversold status. However, "oversold" does not
mean "buy." So until these generate true buy signals -- which they
would do with one more day of advances leading declines -- we
consider them as still being on sell signals.
*********************************************************
Join me, Lawrence G. McMillan, at my own full-day Intensive Option Seminar
on Saturday, November 7th, 2009, in New York. http://www.optionstrategist.com/products/seminars
*********************************************************
Volatility indices moved higher this week. Once again, $VIX has
broken up through the downtrend line that has defined its intermediate-
term decline since the March $SPX lows. If $VIX truly does break out
on the upside, that would be negative for the stock market. A close
below 29 would return $VIX to a bullish indicator.
In summary, the bulls may attempt a rally here, but we would not
expect it to be particularly robust -- probably just enough to work off
the oversold condition in the breadth oscillators. Thereafter, unless the
indicators quickly change, we expect a downside breakout to occur.