Monday Prep

The strong kickoff to the Q1 earnings season in the financials pre-market on Friday gave ES the strength to fly through 2900, after many failed attempts this month. The gap wasn’t closed intraday but instead pulled back from one of the measured target zones into the overnight pullback area following the initial pop higher. Another strong close left settle at 2912.50, at the top of the day’s value area.

Overnight so far the range is 2909.25-14.50, the smallest we’ve seen for some time. If the 2907.50-09.25 zone can hold when tested, the main expectation would be for attempted continuation. If that zone breaks and becomes resistance then we could be setting up for a gap fill attempt and balancing. A complete reversal would be the least likely unless we get some strongly negative headlines on the ‘ we’re nearly there on signing’ trade deal, for example. GS have reported pre-market and trading down a few points ahead of the open.

Zones of interest for today below. The 2900 level is an obvious one of course and relevant to option open interest. If prices start to accept inside 2900 it’s likely sentiment has turned and potentially rejected the breakout.

Friday Prep

Yesterday’s RTH session opened and balanced for the first couple of hours above the prior day’s value and looked poised to break above 2900. However, a headline driven break saw longs flushed out and a lower distribution was formed for the rest of the day. Very little give back still with buyers stepping in on every dip.

Overnight has seen stronger than expected Chinese data , a bid for Anadarko by Chevron and stronger than expected Q1 results from JPM. ES broke through 2900 (on it’s sixth attempt this month) and has broken out of the balance range it’s been stuck in. The range so far is 2890.75-2908.75 and trying to push higher versus settle at 2891.75. There are no major US economic numbers today but financials likely to be the lead. Zones are the same for today - again, upper zones are target areas not necessarily spots to fade. I’d want to see a real shift to negative internals/momentum etc before fading this.

Thursday Prep

Before looking at yesterday’s RTH session it’s worth checking the monthly, weekly and daily charts for some longer term perspective and context:

The RTH session had weak selling pressure and held above the prior day’s vpoc, after initially failing to break the 90-92 zone. Post the FOMC minutes there was some brief volatility but the rally into the close was back once again, with a move to the high of the day. Buyers firmly back in the driving seat hungry for the all time high

Overnight the market carried on through the high from yesterday and once again tagged 2900.00 before dropping into 2890.00 and hitting 2900.00 again. It’s poised for a breakout move higher - the key is to gauge whether there’s enough volume, momentum etc to sustain it or whether it fails (which could present a brilliant short opportunity). For now, expectation is for continuation higher and for dips to get bought. Zones of interest today are below which include some measured targets on the upside:

Wednesday Prep

The headline driven weakness overnight yesterday followed through for the first half hour, breaking straight through the prior day’s low. Most of the morning was choppy upward drift hitting a high one tick ahead of the prior day vpoc. There was a clear downward shift in TICK momentum as the high was made (see 1 min chart above right) which ultimately led to a break lower in the afternoon session.

Overnight so far the market has bounced and the current range is 2878.00-91.25 vs settle at 2882.50. A slew of European industrial production data was better the consensus forecasts, ECB announcement as expected and pending is US CPI and FOMC minutes.

Zones of interest today are above (right). A lot will depend on whether the market can break and hold above the 90-92 zone (in which case the recent weak high at 2900.00 looks vulnerable) or fail to and possibly consolidate around the current month vpoc which is now at 2882.75, and/or push lower. Higher timeframes remain bullish obviously.

Tuesday Prep

A weak open yesterday got prices below the overnight low (2889.00) for a short while but failed to have any meaningful follow through in the underlying, as evidenced in the NYSE TICK. With weak selling interest the larger time frame bias took control once more, and once again a late rally into the close.

Overnight the range is currently 2900.00-2890.75 versus settle at 2898.25, having weakened recently on the back of news that Trump is going ahead with tariffs on the EU. The hourly below shows the shift up in April’s vpoc to 2895.00 which has also shifted the value area slightly higher overall. If we see a failure to push through 2895 today on any test this could bring more sellers in. However, the larger time frame bias remains bullish so will need to see strong downside momentum and weak market internals to maintain the downside through higher time frame prior support areas.

Zones of interest for today below:

Monday Prep

Friday’s employment report triggered the spike pre-market into the 92-94 zone. Once open there was a brief (failed) attempt to close the range gap from Thursday followed by a very slow, narrow range balancing at higher prices leaving a pronounced distribution between 92-95. This will be a useful frame of reference for today as acceptance above 95 or below 92 could help with directional conviction today.

Overnight so far the range is 2889.00-2999.50 versus settle at 2896.00. The pullback overnight after the initial spike higher dropped back into the monthly value area high, LVN and recent breakout area (see highlighted area below). If we begin to see the market hold inside the value area high for long then this increases the chances of the upside breakout failing and seeing a move back down to the other side of value. Holding above that area keeps the bull case intact for now and targets 2900+.

Areas of interest for today below. With daily, weekly and monthly trends bullish, I’d want to see acceptance below the overnight low/monthly value area high before initiating shorts. A rally into the 2899.25-01.25 zone could see responsive sellers engage and the underlying momentum and market internals will need to be gauged in real time as to whether buyers continue to drive through there or it fails and there’s some long liquidation.

This week’s US economic calendar:

Friday Prep

Yesterday was another low volume day holding higher prices. For the most part it ranged between between the two zones of interest, shown on 1 min and profile charts below. The close at 2882.75 was also the vpoc for the day. A lot of recent sessions we’ve seen a late selling down in the vix and rally in the S&P into the close.

A quick look at the daily below and we can see the market is fast approaching the breakdown point from last October. I’d expect to see a flurry of buy stops should the market push through that area as it approaches 2900.

Overnight the range is 2880.50 - 2889.25, leaving the high weak having retouched Wednesday’s high. Zones of interest for today below ahead of the employment report:

Thursday Prep

Yesterday’s overnight gap higher led to a fair amount of two sided trade in the RTH session, eventually testing the prior day’s vpoc to the tick after leaving a poor high at 2889.25.

Overnight the range is currently 2874.00-2883.00 versus settlement at 2879.75.

My main zones of interest are 73.50-75.25 & 82.75-85.00. Above/below those zones would expect to see breakout potential. Next potential support zone below I have at 51.25-53.75, ahead of the open gap. Above 85.00 could accelerate buying through short covering/new buyers to go through yesterday’s poor high.

Potential news pending re China today as well.

Wednesday Prep

A very slow session yesterday with holiday-like volume at just 850k. Very balanced overall in the upper part of prior session but failing to breakout as there was a lack of fuel from underlying internals and volume. The late move to test the prior and overnight high failed to follow through and saw some liquidation into the close.

Pressure remains to the upside though positioning following the gap higher is going to leave recent longs very vulnerable. For now though, pressure is on the shorts as they are forced to cover on every rally.

Overnight so far the range is 2865.25-86.25, breaking out above the 75-80 zone mentioned yesterday. I’d want to see a clear breakdown and retest fail before considering shorts at the moment and positioning for longs is less attractive up here too - i’d prefer to stay out until more clear to me.

Tuesday Prep

The week opened with a gap higher which steadily continued up to the close yesterday with little give back. Volume was fairly low at 1.2m contracts, especially considering the 29 point range over the whole session.

The daily chart below shows two areas the market is approaching which have a good chance of bringing in sellers, both from a long exit and short perspective. If that area holds this could offer a high reward to risk move for swing trades on a correction back towards the high volume area below. A move up through the CLVA would invalidate the short and put the all time highs back in focus (which i can’t believe I’m saying 3 months after December’s move!).

The hourly chart below shows the monthly volume profiles as well as the composite. The acceptance above last month’s high is clearly bullish (for now), though as mentioned above it’s running into potential higher time frame resistance. Price action remains bullish until proven otherwise, plus shorts being squeezed out can accelerate the move up (though this tends to leave weak structure).

Yesterday’s RTH profile below shows the magnitude of the gap and also the very mechanical way the market moved higher yesterday leaving potential for a cascade of stops to get triggered by recent longs if sellers step in.

Overnight so far the market has ranged between 2864.00-73.50 versus settlement at 2870.50. The split session profiles below show areas of interest today. In terms of potential scenarios today I’m considering most likely. As always, price action, volume, delta and market internals together with order flow give context to any of these:

  • a squeeze higher into the 75-80 zone where sellers step in and we see some long liquidation and consolidation

  • a test of yesterday’s high and fail followed by liquidation and test of yesterday’s low and potentially the gap.

  • a squeeze higher which brings in more strong buying through the 75-80 zone and trends higher