Monday Prep

Did I miss much??!!

Apologies for the long break in service but I intend to get back to providing my market analysis, review and zones of interest for the ES with immediate effect. Thank you to a very kind reader who emailed recently and encouraged me to get writing again.

A lot has been happening since I last wrote in early December. The most recent events in February have eclipsed what was a parabolic rise in January. Structurally, there have been some key drivers behind these moves. Shorty volatility strategies being the main one and the break down in this along with concerns of wage inflation beginning to show and a pick up in yields are all contributing factors. The era of super low volatility is likely to be over, which is fantastic news for us traders. That doesn't mean we couldn't still make new all time highs, but if that did happen expect more volatile swings than we saw last year.

An overview of the daily chart below shows the monthly volume profiles along with a 20 and 200 day moving average. There was close to a 200 point bounce off the 200 day moving average before a re-test and the rally we've seen since.

A look at Friday's action on the market profile in closer detail below:

The key levels above Friday's close are the low from Friday Feb 2nd at 2755.25 and the high on Monday Feb 5th at 2763.00. If this rally cannot push through that 2755.25 level and we see sellers defending that breakdown point, then any short term 'weak' longs are likely to bail out and accentuate a liquidation break lower.

Continuation higher looks likely from the price action, especially if the Feb 5th high is breached which would be another failure point for shorts and covering needed.

Below is the hourly chart with Feb's volume profile. I'd be very cautious shorting this until we see a break down and failed retest of recent highs.

A closer look at the RTH profiles from 2nd & 5th Feb show where the market is attempting to back and fill if we see a continuation higher today:

I'll update zones this week but in the meantime, initial resistance potential is at 2755.25, then 63.00 and initial support at 2727.75-2729.75 (break out area from Friday).  

The new FOMC Chairman, Jerome Powell, is speaking on monetary policy at 10am ET tomorrow and Thursday so expect a pick up in volatility again this week.

Friday Prep

I'm still using the Dec contract until Monday even though volume has started to be higher overnight into March. 

Yesterday opened at 27.75 and immediately tested the overnight low and we got a one tick failure below followed by a reversal. The immediate target then becomes the overnight high at 37.00. Value pushed higher on the day but market internals were not particularly supportive of the move. 

Overnight we've had the employment report and the range is currently 37.75-49.50, extending up into the 48.75-50.75 resistance zone (where the poor high is shown in profile chart at the top). If upside momentum fades, we may just balance between initial support and resistance. A break and hold above IR will continue to trap shorts and see a squeeze. If initial support fails and prices accept back in yesterday's value area, we could still see buyers step below.

Thursday Prep

Going into yesterday's open I was using 25.50-27.50 as the bull/bear zone. It did act as support during the morning with weakening internals. The fast break under 25.50 was a head fake and then saw trapped shorts squeezed with a move up to initial resistance (the morning high tagged the prior day overnight low at 33.75). After the attempted flush lower and the market moved back into the bull/bear zone, you can see below a new TICK high as underlying momentum shifted temporarily. 

The Russell was weak and Nasdaq relatively strong, so there was a lack of confluence with all three removing conviction for a directional move in ES.

A balanced profile was left and both sides of the first hour range (initial balance) were broken and the market settled around it's POC/VPOC /mid and VWAP. The 25.50 CHVN held as support and remains an important short term pivot. The prior month mid at 27.50 also remains important in my view for the longer term bull trend to continue. 

Overnight so far we've seen an initial push higher to 2637.00 followed by a steady decline back to 27.50 currently. 

The zones I'm using today are below. We remain in a two sided market state with prices at a critical juncture for the intermediate trend, I believe.

Wednesday Prep

Apologies for the long break from the daily note; at least we are beginning to see bigger daily ranges and some signs that sellers efforts are not fruitless in the past few sessions.

The pullback from the 2665.25 all time high has seen a move back to 2620.00 overnight, with most volume trading around the CHVN and last month's VPOC at 2625.50. Last month's mid was at 2627.50, and for the long term trend to stand a chance of continuing I'd want to see the market rally back above there and retest it for support. I'm using a bull/bear zone at 2625.50-27.50 for now. If we break and hold below the overnight low at 2620.00 we could see further liquidation down to retest last Friday's low. Above the bull/bear, I'd expect to see responsive sellers step in at the red zones. Any particularly positively spun news headlines could trap shorts and see a sharp squeeze, however. 

The range so far overnight is 2620.00-31.50 versus settlement at 28.25

Today's zones are shown below. The profiles which are shown split are the RTH times and the closed ones the overnight market. 

Friday Prep

The strong rally overnight yesterday found support pre-market at the initial support zone, but this didn't get tested again after the open. The gap above the prior high left shorts in trouble and a the trend day higher would've been fueled early on by covering. You can see from the profile chart at the top how the declining market over the prior 3 days had left shorts vulnerable to a squeeze. I've highlighted the single prints left yesterday from the forcing action early on, which we may or may not see repaired today.

Once the bull/bear zone was broken there was a pullback to re-test 79.25 which was a composite low volume node (CLVN). The move higher fell a couple of ticks short of the 90.00-92.50 zone and drifted back towards VWAP into the close. 

Overnight so far the range is 79.50-86.00 versus settlement at 85.00. Note the overnight low is 1 tick above the bull/bear and the CLVN. Acceptance back below the overnight low will be significant as there maybe an attempt to fill the range and settlement gap below, dependent on market context and price action etc. Acceptance back above settlement puts the bulls firmly back in the driving seat and has potential for a crack at the highs, though would still be watching for reactions at the red zones. 

My zones of interest for today below. 

Thursday Prep

From yesterday's prep: holding below the 62 level could see a long liquidation break down and see shorts push lower. For the intermediate time frame to remain bullish I'd want to see the 2549.00 level hold, which was last month's mid, VPOC and POC. If the market cannot hold below 62.00, shorts will be trapped and we could see a covering rally, though looking for sellers to step in at today's red zones.

Opening at 66.25, we got a move into the 62.0-63.50 zone straight away and some heavy volume driving through the overnight low and getting a fast liquidation break down to the 55.50-56.25 zone where responsive buyers stepped in. There was no downside follow through and stock momentum started to turn positive and the A/D trended higher from it's lows. Once back above the overnight low shorts were in trouble and we got a move up to the second resistance zone, which included the prior mid and Monday's low. Sellers stepped in and there was another test of the overnight low before the close before settlement at 2565.00

We had range extension lower for the month, but still holding above October's mid and VPOC at 49.00. Big picture's still bullish technically and the all time high hasn't been hit during RTH yet. 

Overnight the range is 2562.25-75.75 having steadily moved higher all morning. We may see some correction of overnight longs after the open, though if the market is set to push higher I'd expect the 71.25-72.50 zone to hold. If not, 68.00-69.00 and 63.25-65.25 are areas I'd watch for responsive buying and potentially 57.50-59.00 depending on market context. 

Above, a break and hold above 79.25 gets the market short term bullish again, in line with the longer term.

My zones of interest for today:

Wednesday Prep

Going into yesterday I had a bull/bear zone at 77.25-79.25. Below there put the current range extreme zone at 62.00-63.50 in the sights. The move down fell a few ticks short of that zone and saw a fast short covering move back up into the bull/bear zone, which was tested several times, saw a pullback into the initial support and a further attempt higher into the close but failing to break above leaving a poor high.

Overnight has traded lower since the ETH open, pushing down into the critical range support zone at 62.00-63.50 and making a new low for the month. The range is currently 2577.00-62.00 versus settlement at 2578.00.

As mentioned a few times recently, holding below the 62 level could see a long liquidation break down and see shorts push lower. For the intermediate time frame to remain bullish I'd want to see the 2549.00 level hold, which was last month's mid, VPOC and POC. If the market cannot hold below 62.00, shorts will be trapped and we could see a covering rally, though looking for sellers to step in at today's red zones. A rally back up through the 72.50 level puts the overnight high next target and the poor high and bull/bear zone next, which will bring more buyers in above. 

Today's zones of interest:

Tuesday Prep

From yesterday's prep: There remain weak highs above which have a good chance of being taken out if the 72.50 level can hold, which is a composite high volume node (CHVN). 

The market opened at the 72.50 CHVN after overnight attempting to force out some weak longs. Once open, shorts were trapped below the initial support zone from overnight and we saw a spike higher in the first 30 mins as seen on the profile chart. 

Also from the prep: On the upside we still have the IR zone at 78.00-79.50 which if broken becomes support, as we saw on Friday.

We can see this is exactly what happened after the initial blast through the IR zone, with the pullback into it giving another buying opportunity for both new longs and covering shorts. Having rejected the overnight low, the target became the overnight high after taking out the weak high from Friday. As is often typical with a short covering day, we had a P shaped profile formed.

Overnight so far the range is 2575.25-82.25 on light volume. I'm using 77.25-79.25 as the short term bull/bear zone. Above there, the all time highs are back on the cards with some expected responses at the red zones shown.

If that zone doesn't hold then yesterday's low comes back into target in the 70.25-72.50 zone. We could see a buy response of the 67.25-68.25 and 62.00-63.50 zones, which were launching areas from last Thursday. Acceptance below there traps the recent longs and we could see a liquidation break. Also from yesterday:   This month's low is at 62.25, which if broken puts last month's VPOC/POC and mid point into play at 2549.00. If the market begins to accept below that level risks derailing the bull in the intermediate time frame and we could finally get a move lower to retest the breakout from the 2504-09 area.

Monday Prep

Very slow day on Friday with trade remaining between the initial support and resistance zones for most of the session. Underlying stock momentum was weak so when there was an afternoon break above IR, there was little follow through.

Overnight so far the range is currently 2584.50-71.00 versus settlement at 79.50, having sold off from the highs all morning. There remain weak highs above which have a good chance of being taken out if the 72.50 level can hold, which is a composite high volume node (CHVN). There is PPI data due tomorrow and CPI and Retail Sales on Wednesday, Industrial Production on Thursday.

Weakness below 72.50 could trigger some short term liquidation. This month's low is at 62.25, which if broken puts last month's VPOC/POC and mid point into play at 2549.00. If the market begins to accept below that level risks derailing the bull in the intermediate time frame and we could finally get a move lower to retest the breakout from the 2504-09 area.

On the upside we still have the IR zone at 78.00-79.50 which if broken becomes support, as we saw on Friday. If we are seeing positive moves with the NQ and TF at the same time along with underlying positive momentum and volume, the weak all time high could be challenged again this weak. However, the market is in more of a neutral state with both sides active and looking to dominate short term. The long term trend remains in bull mode for now.

My zones of interest for today are below:

Friday Prep

A reminder of yesterday's prep: 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.

Once the overnight low was broken through mid-morning, which was also the re-test of the weekly low at that point, there was a break down towards the 62.25 monthly low (62.00-63.50 zone). This range extreme saw selling pressure abate and buyers step in, eventually squeezing shorts out and pushing back up into the week's value area and POC/VPOC.

Overnight we've seen a sharp move lower in bonds with accompanied weakness in stocks. The range is currently 2571.50-85.75. I have initial support at 72.50-74.25 today and failure to hold that puts yesterday's lows at risk and room for a breakdown below there the more that area is tested (49.00 next downside target). The 41.50-43.00 zone is a key area of longer time frame support which if broken has little structure below until the 2504-09 area, where the end of Sept breakout started. 

Above, I have the initial resistance zone at 78.00-79.50. The 83.50-86.00 zone is key for shorts to hold or risk a squeeze back up to fill the 91.00 settlement gap from Weds/Thurs. It's worth bearing in mind we still have a weak all time high at 94.50 which has not yet been tested during the RTH session.  The weekly and monthly trends remain bullish for now until proven otherwise, with the daily in neutral territory.

Zones for today: