Thursday Prep

Weakness in the Russell was weighing on the ES in the morning but it failed to test the prior day's low. Once back above the prior day mid, buyers dominated a formed a double distribution closing near the high. 

Overnight in Asian time there was a push to new highs but this was a failed breakout. There has been a push down to test the low of the week at 75.50 which has so far seen responsive buyers step in. The range so far is 2594.50-75.50. At the moment this just looks like an other side of range test after a failed breakout. The market has been in a balanced state this week and until we see aggression below this weeks low I'd expect a buy response to push prices back towards value. However, there'll be more overhead resistance to expect on a move back up. Holding below 75.50 puts the month's low at 62.25 into focus as the next range extreme, where a buy response would be expected on first test.

Wednesday Prep

Yesterday's overnight market had made another all time high at 2593.50 and once the cash market opened there was a push up to test this level which was quickly rejected. Underlying stock momentum was neutral on the first move up and quickly turned negative. The Russell was leading the downside of the major indices. 

Overnight so far the range is 2579.75-87.50. There's very little economic data due, though the EIA report at 09:30 CT could have an impact following crude's big rally over the past few days. There's also a 10 year note auction due at 12:00 CT.

Zones of interest for today are below. With the market in a more neutral state short term I'm expecting more two sided trade. If the 79.25-80.75 zone fails to hold then sellers will be targeting the 72.50 CHVN initially. A push above the initial resistance zone could still see sellers defend the zones above.

IR 2586.75-87.50

IS 2582.25-83.75

Wednesday Prep

A very slow and balanced session on overall low volume of less than 1m contracts, though there was very concentrated volume of over 350k at 72.25-75.

This has been a foothold to launch from in the overnight market where the current range is 2571.00-84.00, making yet another ATH, along with Nasdaq & Dow with the Russell still catching up.

Broken resistance zones become support and all time frames are on the bull trend ahead of today's FOMC meeting and after a strong ADP employment report.

 Today's zones of interest:

Tuesday Prep

After Friday's pop to new all time highs, we got some minor liquidation yesterday which balanced below the overnight low for the majority of time. The initial move up from initial support fell short by 1 tick of the prior VPOC and initial resistance zone. Underlying stock momentum was weak throughout the day (see NYSE TICK) and failure to regain the overnight low were cautionary signals on longs. There was a quick move below Friday's open (66.50) which was quickly reversed. Failure to hold above there puts the continuation of the bullish trend back into question in the short term. Long term remains bullish and we'd need to see a break and hold below last week's low before there's any risk of that changing.

Zones of interest for today are below. Acceptance below the 65.50-66.75 zone is a sign of short term weakness, though we could still see reactions at the zones below. I would also expect selling response at the resistance zones marked, though this would be against the long term trend and caution is needed if momentum and volume is behind a rally.

Monday Prep

Going into Friday's open, the short term trend had come back into line with the long term bullish trend. Overnight value had built overlapping higher to the prior day.

Opening at 2566.50, there were a couple of tests of the initial support zone. Once the market broke higher, through the overnight high at 69.25, there was a reaction at the 71.75-72.50 resistance zone which gave a pullback into the overnight high once more (see above circled).

Forcing action through the initial balance high left single prints until a new all time high was made (2580.75) and the market balanced at higher prices for several hours into the close. There's a small selling tail left on Friday's profile showing some sign of excess.

Overnight has balanced in the area that didn't trade much on Friday, ranging so far between 2571.75-78.25 versus settlement at 78.50.

We may get some balanced trade today and retesting of breakout areas from Friday - zones of interest for today below

Friday Prep

Yesterday's overnight market had balanced within the upper third and initial balance of Wednesday's relatively wide range day.

Initial resistance was broken briefly mid-morning with a tag of the prior day's high, but there was no follow through. It was a very range bound balanced day until a late break down to IS bouncing quickly back to IR and the VPOC at the ETH close.

The GOOG, AMZN, INTC, MSFT earnings beats after hours have kept the buyers in control overnight. The range so far is 2557.50-69.50 versus settlement at 61.50.

Zones remain the same as yesterday, as below. Overnight has already hit the 69.00-70.25 Initial resistance zone. Short term trend is back in line with the larger time frame again, and we'd need to see yesterday's low taken out with acceptance below before this changes. 

Thursday Prep

Going into yesterday I mentioned in the prep that: Clearly the more the 60.50-62.25 zone (IS) gets hit the weaker it becomes and the more likely we see the market auction down through to the other side of the current range, though I would still be looking for reactions at the lower zones (dependent on market state/context). We ended up seeing that unfold with very negative market internals early on, which was a warning sign to not try catching every falling knife.

The move down to the other side of the range, clearer on the hourly continuous chart, shows a head and shoulders pattern in technical analysis terms. The break of the initial support zone (see bottom chart) was accompanied by very weak stock momentum. Broken support becomes resistance until proved otherwise. This effectively was a balance breakdown trapping short term longs from the prior few days.

The test of the 42.00-44.25 range support zone was the only valid area to get long in the face of such weak internals in the morning. This gave the best expectancy outcome being a first test of the range. The shift of momentum in the afternoon and acceptance back above the mid and vwap were warnings not to fade the rally. If the sell-off had been meaningful it's much less likely to see a move above those areas.

Overnight the range is so far 2556.25-63.25 versus settlement at 58.50. The ECB has kept rates at 0% and will continue QE at €30 (half the current rate) for the first 9 months of 2018. So far bonds and equities have reacted positively to the news. 2563.50 is the VPOC of the current week. 

The market's now trading in the middle of the range of the past week, so we're in neutral territory within a longer term bullish trend. Zones of interest for today are below.

Wednesday Prep

Yesterday opened at 2567.50 and briefly touched the front of the B/B zone before moving down to test the prior settlement and vpoc at 63.50. There was no follow though and a poor low was left followed by a squeeze up to the top of the B/B zone. Underlying stock momentum was weak, however, and again there was no follow through to the upside this time. 

Overnight so far the market has tested the bottom of the 60.50-62.25 zone with the current range 60.50-67.00 versus settlement at 67.25.

Yields have jumped across the treasury curve overnight with a bounce in the dollar and some key technical levels being breached.

I've kept the zones the same as yesterday. Clearly the more the 60.50-62.25 zone (IS) gets hit the weaker it becomes and the more likely we see the market auction down through to the other side of the current range, though I would still be looking for reactions at the lower zones (dependent on market state/context).

If IS holds we may just see balancing again between there and the B/B until one side can dominate. Above the B/B we have zones where sellers are likely to step in, though against the larger trend. We also have an all time high made in the electronic trading hours (ETH) which has always previously been tested during regular trading hours (RTH)

There is poor structure below the swing low at 42.50 from last Thursday down to the 2507.75-09.75 breakout zone, so in the event of a move holding below 42.50 things could get ugly fast for longs (not that i'm expecting that today, but that's the point, it's when you least expect it sometimes). 

Tuesday Prep

Screenshot 10-24-2017 09.10.47.png

Yesterday opened at 2576.75, a fresh all time high for the RTH but 2 ticks short of the overnight high. Higher prices were rejected immediately and we saw a slow and steady sell-off. The move down into the bull/bear zone (69.00-70.25) was after breaking the initial balance low and overnight low which was a heads up to be cautious on longs. Breaking below the bull/bear zone saw it retested from below and then accelerate towards the open gap zone (60.50-62.25). Market internals remained moderately negative throughout, and we saw balance breakdowns in the NQ and TF also.

Volume was 1.2m contracts and settlement was at 2563.50, which was also the VPOC on the day. 

So far overnight the range is 61.50-67.50, just testing below yesterday's range. The zones remain pretty much the same today. Longer time frames remain bullish but short term is neutral after yesterday's action and I'd expect to see sellers try to defend the 69.00-70.25 bull/bear zone and attempt to push below yesterdays range into the 54.25-55.25 zone where we could see buyers step in.

Above the B/B, I'd also look for sellers to step in at the 71.75-72.50 zone, though a failure for that to hold would indicate that the march higher isn't over yet. 

Headline risk remains high as we could hear Trump's new Fed chair pick at anytime.