The day started with very low volume on Globex, only 92,000 contracts traded. The overnight trading range was only 3.5 handles, 2694.50 to 2698.00. The first trade off the 8:30 CT futures open was 2697.00, and the ES made a high of 2698.00 before trading lower, hitting out sell stops and running sell programs. The ES made its first low at the 2690.00 level, bounced up to 2693.00, and then sold off down to a new low at 2698.50.
The early price action was weak, and it was not hard to see. The NQ could not hold any rallies. The next move in the ES was back up to a lower high at 2692.00, followed by a lower low at 2689.50, then a small bounce and back down to another lower low at 2688.00, completing a MrTopStep 10 handle rule. The ES bounced and then double bottomed at 2688.00 before rallying up to a lower high at 2691.25. The ES’s price action was clearly struggling.
There seems to be a very tight correlation between the DAX and the S&P. The DAX closed weak, and it seems like the ES follows the DAX very closely. At 11:00 the ES made another new low at 2685.75. No big surprise by the weakness, it has going up too fast and was overdue for a pullback. After a small pop, the ES double bottomed at 2685.50 and then made 3 attempts at the 2690.00 area. Once through, it broke down to 2683.25 at 2:07 CT. The ES bounced up to 2687.75 as the MiM stated to show over $300 million for sale. The 2:45 imbalance showed MOC sell $1.1 billion. It made a new low by 1 tick at 2683.00 on the 3:00 cash close, and then rallied back up to 2686.75 before going on to settle at 2684.00 on the 3:15 futures close, down 11.75 handles or -0.44%.
Tech Stocks Lead Markets Lower
In the end, total volume was under 1 million contracts. What that says is traders are already cutting back in front of the holidays. In most cases the lower volumes favors the upside, but not yesterday. In the end the S&P 500 futures (ESH18:CME) settled at 2685.75, down -10.25 handles, or -0.38%; the Dow Jones futures (YMH18:CBT) settled at 24,792, down -33 points, or -0.13%; the Nasdaq 100 futures (NQH18:CME) settled at 6519.50, down -33.50 points, or -0.51%; and the Russell 2000 (RTYH18:CME) settled at 1541.60, down -8.50 points or -0.55% on the day.
As always, please use protective buy and sell stops when trading futures and options.