3280 will be key in the ES.

Is this a repeat of the June correction?

In early June, the S&P corrected about 300 points in a handful of days. Thus far, we are seeing a similar pattern in early September. If seasonality has anything to say, we should follow the same pattern.

Specifically, our friends at MRCI suggest traders buying the E-mini S&P 500 on September 9th and holding through the 19th have been profitable about 93% of the time in the last 15 years. That said, seasonals also suggest late September could be rough. With these data points in mind, we believe support in the ES near 3,280.00 will hold and if so, the rally could surprise the bears. We know what happens when the bears are caught off guard...a short squeeze. Can we see 3,700.00?

Treasury Futures Markets

30-year Treasury Bond Futures

Treasuries generally soften around rollover, is this a delay or an odd year?

When the futures market front-month shifts from September to December, we often see prices start to retreat. However, this time around the selling has been sluggish. I suspect recent volatility in the stock market as well as reluctance to fight the Fed is keeping the 30-year bond and 10-year note supported. However, I have also learned when the masses have assumed a particular market scenario, such as negative interest rates or at least lower for longer yields, the environment is ripe for surprises.

According to the latest COT report issued by the CFTC, speculators are heavily long the 10-year note but short the 30-year bond. Yet, money managers are largely long the long bond. The last time we saw money managers this long an asset class was the S&P 500 futures in February...and we all know what happened then. Accordingly, as long as the December 30-year bond stays below 179'0 we believe the bears have an edge.

Treasury futures market consensus:

The path of least resistance should be lower (eventually).

Technical Support: ZB: 174'22, 173'14, and 171'28 ZN: 138'28, 138'17, and 137'11

Technical Resistance: ZB: 178'13, 181'15, 182'08 ZN: 139'28 and 140'15


Stock Index Futures

The ES is at a major crossroads.

The bulls and bears will likely be battling for 3,280.00 early next week. As long as the market remains above (a quick intraday pierce doesn't count) the bulls have an edge. Yet, if this level fails, things could get ugly. Nevertheless, at this time we are expecting support to hold and for prices to firm up in the coming week or two.

It might seem far-fetched today, but a run to 3,660.00/3,700.00 isn't out of the question. In fact, that is what the chart is suggesting. That said, if prices do reach such levels, the bears will be out in force...as they should be.

Divergence on the weekly chart suggests the rally is on loose footing. The last time we saw RSI divergence in this manner, the S&P peaked out in early 2018 and failed to make progress until about a year later. We suspect the recent rally might have pulled gains forward in a similar fashion.

Stock index futures market consensus:

3,280.00 is critical support. As long as this level holds, we should see new-all-time-highs.

Technical Support: 3280, 3240, 3181, 3112, 2981, 2920, 2753, 2434 and 2168

Technical Resistance: 3451, 3535, 3550, and 3595


E-mini S&P Futures Day Trading Levels

These are counter-trend entry ideas, the more distant the level the more reliable but the less likely to get filled

ES Day Trade Sell Levels: 3535, 3550, and 3600

ES Day Trade Buy Levels: 3461, 3430, 3393, 3364, 3337, 3313, 3270, 3220, and 3180


In other commodity futures and options markets...

March 4 - Go short the September eurodollar near 99.37 and buy the 99.50 call option. Total risk is roughly $600 depending on fills (prior to transaction costs).

April 22 - Bull call spread in December corn using the 350/400 strikes for about 11.5 cents.

May 20 - November nat gas call butterfly using the $2.50/$3.00/$3.50 strikes.

July 20 - Buy back short December corn $4.00 call to lock in gain on that leg of the vertical spread (close to $300). Hold the long $3.50 leg of the spread.

July 27 - Bear put spread in October cattle using the 105/100 strikes.

July 28 - Bear put spread in October oil using the 39/36 strikes.

August 18 - Buy October bean oil 31 puts for about 55 tics ($330).

August 19 - Buy October euro vertical put spreads using the 118.50 and 116.50 strikes.

August 24 - Offset November natural gas butterfly to lock in gain of about $700 to $800 per lot for most (before transaction costs).

August 27 - Buy the December wheat 5.40 put and sell the 5.10 put for about 10 cents ($500).

August 31 - Buy January soybean 9.40 put and sell the 9.0 put for about 14 cents.

September 2 - Exit cattle put spread

September 8 - Exit October crude oil put spreads to lock in gain.




Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data.

Seasonality is already factored into current prices, any references to such does not indicate future market action.

There is substantial risk of loss in trading futures and options**

** These recommendations are a solicitation for entering into derivatives transactions. All known news and events have already been factored into the price of the underlying derivatives discussed. From time to time persons affiliated with Zaner, or its associated companies, may have positions in recommended and other derivatives. Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction. Seasonal tendencies are a composite of some of the more consistent commodity futures seasonals that have occurred over the past 15 or more years. There are usually underlying, fundamental circumstances that occur annually that tend to cause the futures markets to react in similar directional manner during a certain calendar year. While seasonal trends may potentially impact supply and demand in certain commodities, seasonal aspects of supply and demand have been factored into futures & options market pricing. Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past, or will in the future, achieve profits using these recommendations. No representation is being made that price patterns will recur in the future.