ES weekend review

Friday closed at a new all time high following an attempted break to the downside early which failed to accept below last Friday's RTH low. Agreement on a 4 month extension of the bailout for Greece sent prices higher, after some initial conflicting reports. Volume was low for the range at 1.6m contracts and only 3.2bn shares traded on NYSE. There was a big shift up in the VPOC for the day at the close to leave value overlapping higher after starting the day overlapping lower. There are anomalies in the profile from Friday which I would expect to get repaired during the next RTH session.

 

The game is only getting started with Greece and I have every confidence that it will all fall apart again in the future. This doesn't help the day trader though as cognitive dissonance can interfere with the market generated information. As we stand, markets want to move higher in the face of ever expanding valuations assuming strong growth for the next few years. A research piece on forward P/Es for the index can be found here for interest. 

Quarterly earnings season from the energy sector will be telling in light of the oil price collapse as forward P/Es are the highest in the index at 26.5 versus the 5 year average of 12. The sub-sector breakdown is more telling with drilling at 10.6, equipment & services at 19.4 and the outlier of exploration & production at 75.9! The forward P/E of the index stands at 16.9.

A look at the monthly chart shows the main price objective at 2156.00, being the 161.8% extended retracement of the Oct '07 high to Mar '09 low:

We are one-timeframing higher on the weekly chart and broken out the range we've been in for some time. Last week's high at 2095 and close at 2093.50 are ones to watch:

The daily RTH chart shows the gap still left following the move away from the high volume 2060-65 area. A break of last Friday's low could see a liquidation and filling in of this area.

The 60 min chart shows micro composite value area of the range the market has recently broken away from. Bulls will want to hold above this value area to keep the upper hand.