How Far Can the S&P 500 Rally From Here?: Chart
The S&P 500 is approaching a key area on the charts.
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Our View
i don't think this rally will last, but ride it if you are long. Clearly the ES was oversold and the rally in the bonds has helped the stock market’s cause.
While the Stock Trader's Almanac stats were bullish for the Dow this month (currently +1.4%), the S&P (-1.6%) and Nasdaq (-5.4%) have been the weak link. I expect that trend to continue right into the end of the month.
That doesn't mean the ES can't rally further, but I think it's important not to forget the trend, which remains lower.
Our Lean
Right now the markets are holding, but my question is for how long?
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Danny Riley is a 39-year veteran of the CME trading floor. He has run one of the largest S&P desks on the floor of the CME Group since 1985.
Daily Recap
The ES opened at 4477.50, up about 37.50 points from the 4:00 close the prior day. The ES rallied 7 points to 4484.25, fell back below the Globex high at 4480.50 and ultimately fell 32 points down to 4452 at 10:00.
It was set to become a long and choppy session. For instance, the ES rallied ~30 points in the next hour and put in a lower high at 4481.75. Then it fell 25 points to 4457 at 12:20, putting in a higher low. Finally, one more 24 point rally to 4481 at 1:40 gave us another lower high before the pattern eventually broke.
That’s as the ES fell 37.50 points to a new session low at 4443.50 just before 3:00. After a bounce, the ES went into the 3:50 imbalance at 4468 — up 25 points from the recent low. When the MIM showed $1 billion for sale, the ES fell 15 points to 4453 and closed at 4456 at 4:00, down 3.75 points or 0.12%. At 5:00, it settled at 4469 after a solid post-earnings reaction from Tesla.
In the end, the ES opened firm then flopped. In terms of the overall tone, it was a very choppy day contained within a tight range. In terms of the ES’s overall trade, volume was steady with 1.42 million contracts trading.
Total Range: 51.50 points
H: 4484.25
L: 4432.75
Technical Edge —
NYSE Breadth: 58.8% Upside Volume
NASDAQ Breadth: 40.5% Upside Volume
Yesterday’s action was tractionless in the overall indices, but it allowed us to achieve several price targets in our holdings below, namely TGT, ACB and VRTX.
Hitting a series of price targets is always nice. There’s the obvious money-in-our-pocket part, but it allows us to reduce stress by moving to break-even stops and re-evaluate the market from a more fresh perspective.
Game Plan
Today we’re going to see how much strength the market really has. Specifically, can the S&P power through yesterday’s high and a key area?
Everyone wants to be excited and wants to see the rally hold in earnest. I think it’s important to remember that it’s a “prove-it” market for the bulls. They must prove they have momentum right now, because largely speaking, we’re still in a downtrend.
S&P 500 — ES and SPY, Bonds, TSLA and COP
The ES has been frustrating traders yesterday and today — aka me — because it keeps making the moves we’re looking for but doing so during Globex.
Yesterday it approached the 4490 to 4500 zone we were looking for, then it faded. Now it’s pushing higher again but doing so during Globex.
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Go-To Watchlist
*Feel free to build your own trades off these relative strength leaders*
Numbered are the ones I’m watching most closely. Please look at these closely, as there are several updates (the most recent of which are noted in bold).
COP — …[premium only]
VRTX — First trim zone hit → Next trim spot at …[premium only]
PANW — Trimmed into weekly-up area near $631. Still looking for …[premium only]
TGT — $250 trim spot hit → …[premium only]
WMT — Trim at $158 → B/E Stop. Inside week. Now looking for …[premium only]
ABC — $166 Trim spot hit → For the final portion …[premium only]
Relative strength leaders (List is getting longer!) →
…[premium only]
Economic Calendar
