Thursday Prep
Review
The gap higher and continuation to new highs was yesterday's main expectation, though volume was only 1.3m contracts. The move up is leaving weak structure below which will run through quickly when we do see a correction. However, the bias remains to the upside until proved otherwise.
The market internals were not excessively bullish as you can see below. There was an reaction off the second resistance zone and a pullback to vwap before continuing to new highs before the close. There has been a strong sell-off in bonds over the past few days with the move higher in stocks, more in keeping with asset allocation switching out of bonds into stocks.
Plan
Overnight has pushed to new highs with a range of 2291.75-99.50. I'm using a short term bull/bear zone at 94.50-95.75 as I think if the market fails to break through that we may see some short term liquidation into the zones below. This doesn't alter the medium and long term bullish bias. Holding above 95.75 should lead to continuation through the 2300 level. There is no hard resistance above clearly and I'm not looking to fade a run up until we see a change in short term trend.
Wednesday Prep
Review
We finally got a directional move yesterday, once the market had pushed and held above the initial resistance zone at 67-68. The resistance zones were targets and not areas to fade once the break was on, as stated in yesterday's prep if there was a break above IR. Most strength was in the materials sector following comments from Trump.
The move higher was on fairly low futures volume of 1.2m contracts, and the action was forced with shorts squeezed and weak structure left in the day's profile. This would be expected to be filled in though the trend higher is in play for now.
Plan
Overnight has ranged between 74.75-82.25, holding an area of support from yesterday's rally. If 74.25 breaks I would expect small liquidation but for responsive buyers to step in at the zones below (depending on news/volume etc.).
The bias is clearly bullish and continuation is the main expectation. The two resistance zones marked below are targets short term based on fib extended retracement levels and not necessarily areas to fade. Shorts could continue to be forced to cover and we could see similar type action to yesterday. Alternatively, we may see some consolidation at these higher prices before continuation or a brief break lower to find new buyers. We would need to see a break below the 59.50-62.00 zone to change the short term bias to bearish.
Tuesday Prep
Review
A failed break through initial resistance left a selling tail between 64.50-67.50. The 67.50 level was highlighted last week as being an LVN of the current multi week range, and important to find support at if there's a break through to the upside. The upside failure saw a sell-off to take out last week's low but there was no follow through and buyers pushed prices back above the middle of the day's range but below the range VPOC at 64.50.
Market internals were not majorly bearish on the move lower and became more positive once the bottom of the 52.25-54.25 zone had been tested (see below).
Plan
The overnight range has been narrow so far at 2259.50-64.25 on light volume versus settlement at 62.00.
We're still seeing two-sided trade and I think that until the 67-68 resistance or 50-52.25 support is broken with volume and momentum, helped by the Nasdaq and Russell in alignment, we may continue as it has been.
If the initial resistance is broken and becomes support, I would use the upper zones as targets and be cautious of fading unless there are clear divergences in market internals. There are still several weak highs, including the all time high.
On the downside, if 50 breaks I'm expecting a push through the 48.50 swing low into 42.50-44.50 which was a support area from Jan 3rd. If that zone fails to hold we could see a flush through to the 34.50-37.50 zone, depending on volume/momentum etc.
Monday Prep
Review
Friday failed to see a breakout from balance, which was my main expectation. The underlying internals were not supporting the rally and the market had a liquidation break lower, followed by balance below the overnight high, before settlement at 2266, just above the current range VPOC at 64.50.
Plan
The chart below shows the range the market has been stuck in for the past 6 weeks and the value area created between 2254.00-69.25, around the 64.50 VPOC.
Until we see some acceptance outside of value along with strong momentum and volume, we are likely to continue seeing two sided trade. It's a fairly light economic calendar this week sp all eyes will be on any policy developments from the new administration.
Updated zones for today are below:
Friday Prep
Review
The market opened a tick above the prior day's high and the attempt to push through and hold above initial resistance failed. The market internals were weak from the off which gave a heads up to be cautious of longs with a failed breakout and look for a potential reversal. The 52.25-54.25 zone held (breakout area from Jan 12th & range VAL) and there was a move back to vwap into the close.
Plan
Overnight has ranged between 2260.75-68.00 versus settlement at 2261.50. Notes and bonds have been weak again with the 10 and 30 yr yields hitting 2.51% and 3.08% respectively. With the inauguration today we are very likely to see a break from balance and a wide ranging day. The zones are still the same and the weak highs are vulnerable, which includes the all time high. A sustained breakout either way is going to need heavy volume and momentum along with underlying market breadth, or it could fail and move back into balance.
Today's zones below on 30 min and renko charts:
Thursday Prep
Review
The opening drive lower and bounce off support was about the extent of any excitement in yesterday's RTH session. An inside day with a strong buying response off the low (also the value area low of the year so far).
The 2 min chart below shows the reactions between the zones and a weak/neutral TICK and A/D, which didn't support a move higher.
Plan
Overnight has ranged between 2261.50-2268.25 on light volume versus settlement at 2266.50.
The zones are exactly the same as yesterday with a short term bias neutral/bullish. The strong buying tail from yesterday showed a lack of selling pressure and once again the dip got bought. We should get movement outside of the range once the inauguration is out of the way and odds favour an upside break to take out the poor highs that have been left over the past couple of weeks. However, anything can happen obviously and if the market breaks and holds below the 58.25-57.25 zone I'm cautious of longs and the zones below are targets. We could still see responsive buying but this will need to be watched in real time along with monitoring market internals etc.
As said yesterday, a break above the 67.25-68.75 zone and pullback to there could offer decent support for a continuation rally.
Zones below on 30 min and renko charts:
Wednesday Prep
Review
The above chart shows the combined market profiles (time) and volume profiles for the year so far (full Globex session). The balance continues around the 2265.00 VPOC with the value area between 2258.25-2270.50. There's a step in the volume profile at 2267.50, so if there is a break higher through that we may see support there on retest.
Yesterday's RTH session traded between the initial support and resistance zones. The underlying market was weak in momentum terms, as shown by the TICK. There are weak highs to retest at 2274 and 2277, with no selling tail shown at the all time high yet.
Plan
Overnight so far has ranged between 2261.25-68.50. CPI and Industrial Production are due at 07:30 ct. Crude is about 1.5% weaker and the dollar has bounced following its recent selloff.
The bias remains neutral short term and bullish long term. A break and hold above initial resistance with decent volume and momentum puts the all time high at risk. Another test of the 57.25-58.25 support would be the third attempt to break through so will be watching internals closely. Meanwhile, if overnight support at 61-62 holds on test and buyers push back above the 64-65 bull/bear zone, this would signal strength and potential continuation higher.
Tuesday Prep
Review
Below is the RTH daily chart with monthly volume profiles behind and a 5 year composite profile.
The bullish reversal from last week's sell-off has not yet been tested in RTH, but overnight has seen a test of one of the support areas from the rally.
The daily Globex chart below shows the current range within a range, balancing at higher prices around the 2265.00 HVN. The overnight range is currently 2257.50-67.50 on higher volume than we've recently.
The zones for today are below. The 57.25-58.25 is an important support zone to hold or I think we could see an attempt to test last week's low. Similar with the 66.50-67.50 overnight resistance; If that breaks and holds, then main expectation is for an attempt for the all time high. We may continue to see two-sided action around the 65 HVN, but the range will be expected to break soon with a good amount of energy either way.
On the downside, the 50-51 zone would be the last key support for responsive buying I would expect before we could see long liquidation. The 27.25-29.25 zone would be where longer time frame support would be expected on first test.
Friday Prep
Review
We saw a drive away from the bull/bear zone on the open (i.e. the multi-day range high volume area on this occasion) and weak market internals supporting the move lower breaking the short term balance low area. The break below the IB low failed to bring in much more selling, with a tiny amount of volume traded below 2250 leaving a step in the profile. The over-riding long term bullish bias saw selling momentum dry up and a short squeeze once back above the 54-55 area, eventually leading to a test of the prior day VPOC.
Overnight
The range is tight at 64.25-67.75, holding above the multi day VPOC
Plan
The market has rejected the breakdown of balance and the main expectation is to now test the opposite extreme i.e. the poor highs at 74 and 77. There are very few changes to the zones today
Thursday Prep
Review
We can see from the profile a fairly balanced distribution, considering the moves, and a VPOC above the current range VPOC at 64.50. The market remains within a range and is building energy the longer it stays in it for a trending move, as the more volume that builds is going to put more positions offside once it breaks.
We saw some good movement yesterday, thanks to Trump's press conference. The morning move higher rejected the initial resistance zone. The comments regarding the drug industry by Trump sent the biotech sector into a spin, pushing down into the 54-56 zone where buyers responded. Another test of that zone after the initial bounce saw a rally into the close to just break through initial resistance. The USD sold off sharply and yields dropped (helped by a lack of economic stimulus detail from Trump and a strong 10 yr auction).
Overnight
So far the market has sold off from the closing high and continues to balance around the range high volume area and VPOC at 64.50. The Globex range is currently 2260.75-70.50, inside yesterday's range.
Plan
The current multi day range continues to build volume and potential energy for a trending move once the range breaks. Until then, we have a long term uptrend and a short term neutral bias. We could see responsive action from both sides and I'll be closing watching for signs of increased pressure/volume and momentum as well as broad market participation, or lack of it, into the zones.
Below are the zones for today on the split session market profiles and the shorter term renko charts: