Over the weekend, it became more and more likely that the US Federal government would be forced into a partial shutdown. Essential government services including the military, Social Security, Medicare, Medicaid, and the Postal Service will continue operation however hundreds of thousands of “non-essential” employees will be furloughed. Historically we’ve had shutdowns last as long as a month, so it will be interesting to see if an 11th hour deal is cut tonight or if federal employees will be asked to stay home tomorrow. After volatility shook out over the first hour or so, the markets went into a waiting mode for information about the government shutdown negotiations. Congressman were hitting the airways and the talking heads were flaming the fire causing some afternoon ES rotations.
The potential negative consequences of a US government shutdown were reflected in the sell off in the Asian session when the ES futures opened Sunday night. The European session waited for the US session for some direction. The ES opened and immediately pushed down hard to create a blow off bottom. A nice looking long order flow opportunity unfolded off the blow off bottom but it unfolded between DTG levels so I didn’t consider it as an example trade. The ES trended up for about an hour, offering a few pullback long order flow opportunities on the way up until it finally reached a DTG short area. A short order flow opportunity did unfold which provided some posts in chat about trade management, thus I selected this opportunity for today’s example trade.
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