End Of the Year Chop and How to Trade It
Plus setups in the SPY, MU, CSCO and more.
Our View
There was a lot of two-way flow on Wednesday. The big investment firms and ETFs were selling the losing stocks and marking up the winners. That’s just how it works.
I'm going to keep this short and sweet.
I think the ES rallies on Globex and if it gaps up, I think it may keep going up. I called the big late-day stop-run up to 4794 on Wednesday and my guess is if the futures are firm, the next level of buy stops comes in from 4797.75 up to 4818. Then we may have the potential to push up to 4850 on Friday.
I want to say this again, if you have big profits and feel like taking them, that is 100% OK. I know everyone is thinking about the last trading day of December, but I'm looking into January and I see the ES going up in the first two weeks of the year.
As the PitBull always taught me, trade your position. Don't sit there and watch big profits turn into small change.
Remember, we’re open for trading on New Year’s Eve, too.
Daily Recap
The ES opened Wednesday's regular session at 4781, traded up to 4791.75 at 9:42 and sold off 22 points down to 4770 at 10:17.
After the low, the ES traded back up to a double top at 4785 and dropped 10 handles down to 4775 at 11:34. From there, it traded sideways to down and traded up to a higher low at 4772 at 12:35. That low set up a rally back up to 4793.50 at 3:38.
After a slight pullback, the ES traded 4796 — the session high — as the 3:50 cash imbalance came out showing $1.8 billion to buy. The ES quickly went offered and traded 4784.50 on the 4:00 cash close. On the 5:00 close, the ES settled at 4784, up 3 points on the day.
In the End
The ES acted weak until after 3:00 when the futures started to firm up, but gave up most of its late-day gains. In terms of the ES’s overall tone, it acted mixed due to the late two-way flow. In terms of the ES’s overall trade, volume was low at 833,000.
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Technical Breakdown — SPY/es, MU, ABBV, CSCO, FUBO
NYSE Breadth: 40.7% upside volume
NASDAQ Breadth: 36.5% upside volume
Wednesday’s breadth numbers were nearly identical to Tuesday’s results. When we look at the charts, you’ll see why.
I called Tuesday a “no-day” yesterday and with Wednesday’s action, we could call it one too. We’re in a slow period with the year-end trade in full force. Because we don’t have a short trading week for the New Year, the markets will be open for the next two days. However, that doesn’t mean volume will pick up meaningfully.
Below is the S&P 500 and S&P Futures. If a chart is worth 1,000 words, these do a wonderful job illustrating just how tight (and slow) the action has been.
S&P 500
