Tuesday 3rd September – ES Review

Morning Traders,

Hope you enjoyed a nice long weekend celebrating Labor Day, here we are with a new month in front of us and all of the possibilities that comes with that. I hope August was good to you on the P&L front, and we’re hoping to deliver good insights throughout this trading month, to help you along the way.

As we come into the new month, I’ve looked at 3 different U.S. equity markets on a daily time-frame (screenshot below) to see how the patterns are playing out. All 3 are in a flag formation, although the Russell 2000, is the laggard trending down on a daily time-frame. The wider context is the degree of lethargy around the trade deal with China and the feeling that it’s going nowhere (I personally think it’ll be timed to coincide with Trump running for 2020). The current balancing zone between 2820-2940 is a balanced area, and we’re currently trading in the top half of this zone. With the Autumn now officially started, funds & money managers are back at their desk and looking to execute on their plan for the remainder of the year. I’m of the opinion (which matters for nothing!), that this zone gets resolved to the downside in the coming weeks.

We’re on the back of a 3-day weekend, so I expect the open in 20 minutes to be disjointed somewhat. The big money on the sidelines is waiting to see how things unfold, allowing orderflow to come into the market and see if we can hold above 2900. Personally speaking, I won’t be trading during the first 60-90 minutes so I can see what way the market is going to trade for the day.

Some areas of interest for me will be 2890.50 to the downside which is a poor high from last Thursday’s trading range, there are also some single prints during Globex session the following day (which I don’t give much value to) at 2888. We still have a gap between last Thursday’s close and Friday’s open, which could be a target to long from. To the upside, we have Friday’s low at 2913.25, Friday’s Value Area Low at 2916, T+2 Half-Back at 2918 and Friday’s close at 2921.25.

These are all areas to launch very short term trades from, but I will wait until we have 60-90 minutes of trade under our belt before doing anything.

Good luck, and happy trading.