ES review & plan
Wednesday's trade going into the holiday was light in volume, unsurprisingly (741k contracts & 2.7bn shares on NYSE). Regular trading hours range was the ovenight low, which coincided with the prior day's initial balance low, pushing up to the overnight high at the end of the day.
The VPOC at 2067.00 of the range in the past week is prominent and key for longs to hold onto if a more serious liquidation break is to be avoided. 2064-2071 is the value area created so far. Acceptance below 2064 and failure to break break above 2067 on a retest would signal the likelihood of a break to the gap from 2054.75-2052.50.
A look at the longer term charts shows the upside objectives.
The monthly continuous contract shows the 161.8% extended retracement of the Oct '07 high to March '09 low at 2156.00, which is 4.3% higher than where we are currently. I think the odds are high of this bringing longer term money in as responsive sellers.
The weekly chart shows we are currently pausing at the first major fib extended retracement of the Sept-Oct near 200 point swing. The next objective is the 161.8% of this move at 2139.00.
Stocks close early today and volumes are expected to remain light. Crude's sharp falls will be the major influence on the market again today for oil and transport related stocks.
ES review & plan
Yesterday saw another fresh high and low volume (976k contracts & 3.3bn shares on NYSE). Following the pit open there was a rally to exactly the overnight high, which then failed. The target then was the prior day's poor low, which was also the overnight low. This was hit in the second hour of trade, running through stops and finding a low at 2062.75, an HVN from last Friday. Buyers pushed prices back up into the prior range leaving value slightly overlapping higher.
2067.00 is a key high volume node for bulls to maintain above for continued upside. Durable goods and jobless claims are due at 07:30 ct, Chicago PMI at 08:45 ct (released a few mins prior for subscribers), consumer sentiment at 08.55 ct and new home sales at 09:00 ct. Going into the Thanksgiving holiday, volumes will probably be light.
The most likely scenarios today I think will be possibly:
1. Yesterday's range is held and volume builds above the 2067 HVN to challenge the highs again. With trends all up this remains the highest odds move, though I think the market is setting itself up for a bigger fall the longer this goes on. The market closed approximately 70 points above it's 50 day moving average, which is very stretched.
2. Volume builds below 2067 and pushes through yesterday's low to test last Friday's POC/VPOC and value area low.
3. Yesterday's range is rejected and the open gap from last Thursday/Friday is targeted.
The current HVN at 2067.00 is also a key fib level for the pit session:
ES review & plan
I was expecting an inside day yesterday but not that inside! Value was higher leaving a record closing high. The 5 point range was supported at the overnight pullback level of 2064.25. Volume was very low at just 780k contracts and 3.1bn shares on NYSE.
Trends remain to the upside and continuation is expected until the market gives more information to the contrary. Failure to breach the excess high from last Friday (single prints from 2069.50-2072.25 would set up for a test lower of Friday's POC/VPOC, low and the open gap and last Thursday's naked POC/VPOC. The next major measured upside target is 2139.00 then 2156.00.
ES review & plan
Friday's pre-market trade had ramped higher on dovish talk from Draghi and the China interest rate cut, leaving the overnight market very long.
On opening, the overnight high was briefly breached and failed. A correction to overnight inventory ensued. The measured move at 2069.25 had been hit. One timeframing lower proceeded until lunchtime, making a low just above the prior range and failing to fill the gap. The low was a couple of ticks short of 50% for the range from Thursday's low to Friday's high.
Value was clearly higher on the day, but there had been a strong effort to counter the full overnight move. Volume was 1.6m contracts and 3.9bn shares traded on NYSE - not high considering the range on the day and overnight news.
This is a short week with Thanksgiving on Thursday and a shortened day on Friday. Here is the week's economic calendar.
Absence of any major economic news leaves me to envisage the most likely possible scenarios:
1. Have an inside day to Friday, trading within prior value.
2. There is a push lower to close the gap and naked VPOC/POC from last Thursday followed by a rally back into Friday's value.
3. There is support at Friday's POC/VPOC area and a push higher to challenge the highs.
The overnight market at at 05:00 ct has traded a narrow range between 2060.75 (Friday's VPOC) and 2067.50.
ES review & plan
Going into yesterday's open the market was short and proceeded to rapidly correct short inventory after the bell. The market found support at the micro composite VPOC at the 2036 area following the CPI and jobless claims. A Philly Fed number, which was a massive outlier, helped keep the bulls in control and the market balanced in roughly a 4 point range between the overnight high at 2048.25 and 2052. The pace of the rally early in the day was a sign that short covering was taking place, along with a P shaped profile.
Volume was just 1.1m contracts and 3.1bn shares on NYSE.
Overnight the market has continued it's upward advance to new highs. Draghi gave a dovish speech early in the European session causing a sell off in EURUSD and pushing the dollar index to highs again. China also announced a surprise cut in interest rates which has added fuel to the rally. The market is potentially going to open strongly imbalanced to the upside with a large gap.
The near term upside measured move from the daily chart is nearly reached. However, I don't see this as an automatic short but will be monitoring order flow closely around this level.
The larger the opening gap, the less likely the gap will be closed during that day. The most probable scenarios I see for today are:
1. The highest odds scenario in my view is that Globex pulls back to VWAP prior to the open, still leaving a large gap, and continues to rally back up to the overnight high and measured target and balances in that range.
2. The gap is closed to the high of yesterday and it continues to rally.
3. The least likely I see happening is that the gap is closed and it accepts into the prior value area.
ES review & plan
Yesterday's open was 1 tick below the prior settlement and after briefly matching that proceeded to target the overnight low and support level at 2044. Once this was broken there was thin volume supporting the move up on Tuesday and the prior low and naked POC/VPOC from Monday was the next target at 2038.50. There was little volume at or below this price and responsive buyers absorbed volume at the 2039 area before pushing back into the overnight range prior to the FOMC minutes forcing shorts to cover. After the minutes there was a 9 handle swing to 2050.50, through the overnight high and at the prior day VPOC, then back to 2041.50 as weak hands were forced out of positions and then rallying to close just under the prior day's close. Value was left overlapping lower. 3.4bn shares traded on NYSE and 1.1m ES contracts.
The overnight market has so far been weak testing for support below yesterday's lows. CPI and jobless claims are due at 07:30 ct.
The value area from last week remains the most important for longs to defend. If there is acceptance below the mcVPOC at 2036 we will probably see a rotation to the other side of value to 2032 at least.
My expected scenarios today are either:
1. Holds above last week's value area and trade within yesterday's range.
2. Start to rotate back into last weeks balance area with support above 2036
3. Acceptance into last week's balance and rotation lower to target the low of the range.
ES review & plan
After the very balanced range last week and this Monday, we finally had an imbalanced move higher breaking through the 2043.75 high. This leaves a decent volume area for bulls to defend going forward between 2030-40, with 2036 the micro composite VPOC.
The opening drive left a 4.75 point spike and one timeframed higher for the day until the last hour when there was an inventory correction and close at the VWAP. A poor high has been left at 2054.00.
This shows a renko chart with the VWAP and 1,2 & 3 standard deviation bands with cumulative delta bars below.
Divergence in the cumulative delta can be seen prior to the new price highs and subsequent correction to the VWAP exactly at the close.
Bulls need to defend the C period pullback low at 2044.00 (top of the spike) or risk a liquidation break back into the prior range. The initial upside target remains the 2069.25 measured move.
The Fed minutes are released at 13:00 cst so we should see a pick up in volatility but don't intend having a position into the release. If there are long opportunities in the morning based on yesterday's levels I may take them but I'll probably sit out until after the release of the minutes.
If the news is received badly prices will likely fall back into prior balance, but if last week's range breaks we could see a long anticipated liquidation break through multiple downside levels of swing lows, LVNs and HVNs. Not a high odds scenario today but still a possibility with headline risk.
ES Weekend Review & Plan
Friday's trade was tight and range bound within the balance of the week and finished strong at 2038.00. Volume was just over 1m contracts and 3.2bn shares traded on NYSE.
Although balanced, the POC/VPOC has moved higher each day this week, leaving the micro composite VPOC at 2036.00 and a value area between 2032.00-2037.50.
The weekly trend remains up and this pause in momentum maybe temporary before further continuation higher. Seasonal factors remain bullish and the initial measured weekly target is 2069.25. With volatility this low, option downside insurance is cheaper as well.
The most likely possible scenarios I see at the start of this week are:
1. Acceptance above the value area of last week and an imbalanced move higher towards the weekly measured target.
2. Continue within last weeks range giving opportunities to fade value.
3. Open within range but test the lower end of the range again and attempt to push lower.
Here is this week's US economic calendar.
ES review & plan
Yesterday saw new highs again (2043.75) during the Asian session and a correction of long inventory prior to the jobless claims announcement. The pit session opened at the top of the prior day's range and drove higher towards the overnight high but lost momentum 2 ticks short and weak longs liquidated drawing in shorts to target the overnight low and prior day's low. It closed close to the middle of the high volume balance area created this week. Confidence is low. Volume was a modest 1.5m contracts and 3.47bn shares on NYSE.
Retail sales are due at 07:30 cst with consensus expectations for a 0.2% rise.
The 3 most likely scenarios I see playing out today are either:
1. The high volume balance area between 2030.50-2037.50 acts as support before an attempt to move higher and make new pit session highs and a Friday afternoon inventory correction back into balance.
2. We remain within balance and rotate back and forth before a break lower targeting last Friday's low at 2020.50
3. Prices open at the lower end of balance and drive lower through 2020.50 towards the next high volume nodes at 2015.50 and 2010.00
Although we continue to see day after day new highs, confidence remains low this week particularly, and volume is unexciting. Seasonal factors are on the market's side but I think it's a case of enjoy the party but dance by the door!
ES review & plan
Yesterday's overnight market traded below Tuesday's range and for a short while it looked as if we may be about to see a long awaited liquidation break. However, buyers stepped up and supported prices at the recent high volume area around 2028, which is where the market opened and only moved a tick lower. An overnight inventory correction rally ensued. Value initially looked to be overlapping lower but shifted back up to be balanced with the prior day. As more time and volume was spent in the 2034-36 area it looked as if a push was about to take out the prior day's poor high and all time globex high, but a liquidation break prevented that from happening. An attempt to do this late in the day left another poor high. This leaves two back to back poor highs to carry forward and an all time high only reached during the overnight market so far.
Volume was 1.08m contracts and 3.27bn shares traded on NYSE.
The overnight range so far as at 03:00 cst is 2033.50-2043.00, lifted by Asian markets and specifically by talk of possible stimulus measures to banks in China and a potential snap election in Japan. There are jobless claims at 07:30 cst and JOLTS at 09:00 cst.
The most likely scenarios I see today are:
1. A test of support around yesterday's POC/VPOC and a move to all time highs for the pit session with continued liquidation breaks during the day.
2. Balance within the last 3 days range and around the most volume at price at 2033.25
3. Open in yesterday's range and begin to accept below the 2029.50 high volume node from yesterday and target the poor low on Monday at 2025.75, then the 2020.50 low.