ES review & plan
Yesterday was the smallest range we've had for some time. Value was higher on the day, despite the aggressive liquidation in the last half hour following the break to the day's highs. The internals (advances-declines) were not supporting the break higher, plus with news algos reacting to an ECB headline regarding Greek bonds, all the action for the day happened into the close and settlement was a tick below the prior day's VPOC.
There is excess at yesterday's high, plus it sold off from the VAH of the range since the December low.
For longs to remain in control they will need to build volume above the micro composite VAH. 2060-2062.50 is a major resistance area, but a break through would challenge the highs again. If longs fail to push through the selling tail of yesterday then we could see further liquidation and shorting to at least the mcVPOC, but likely further through to attempt a downside break of the December low. The longer the range continues, the more energy it is likely to have when a break either way happens.
The overnight session began weak following the close, taking out the Tuesday RTH low by 1 tick. The range is 2020.75- 2047.75 currently, with inventory net long.
Levels of Interest:
ES review & plan
Futures volume was not heavy yesterday at 1.7m, but there were 4.6bn shares traded on NYSE, which is relatively high. Internals were strong all day, which ultimately led to the breakout holding and pushing up into the close. The range gap from Tuesday has not been closed. A poor high has been left yesterday and there are naked POC/VPOCs to the upside
The move higher stopped just short of the VAH of the micro-composite range since mid December. Each side has been tested several times now during the volatility of the year so far as underlying fundamentals and future growth become less certain.
A break through and retest of 2060 now should see new all time highs quite quickly. Failure to break through there will likely see a re-test of the low of the range and increase the odds of a breakout to the downside.
ES review & plan
The RTH session began with a test of the overnight high followed by a drive lower through the prior few lows but it did not have any continuation and swiftly found responsive buyers. Volatility was high still with a 20 point pullback before breaking out to the upside and closing near the high for the day. There is an upward spike above 2004 and a high volume area between 2011.50-14.50 on the day.
If we see acceptance above the spike we may be looking at a move back towards the upper end of value for the range. A break below 2004 should see a test of the prior POC/VPOC at least.
The market is back in the middle of the range since the December low. Overnight, crude has been attempting to break out of it's downtrend, the dollar and bonds are weak.
ES Review & Plan
The last trading day of January saw some volatile moves and a relatively heavy close. December's low wasn't broken but still remains a major target for bears to flush.
The weekly chart shows the balance area we are in within a larger balance zone. A break of the December low puts the lows of that range on the radar. There is still a poor high at the all time highs, which odds favour revisiting to finish the upside auction potentially.
The micro composite profile of the range we are currently in shows we are close to the value area low. The VPOC of this range shifted lower on Friday to 1995.25 from 2018.50. If we start to build volume below the VAL I would expect a push to the December low at least, with 1957.00 an HVN on the composite profile below as potential short term support. A move back up through the current mcVPOC should provide bulls with support to test areas above.
Overnight has been balanced and the references from Friday's profile will be useful for short term levels.
ES review & plan
Following the FOMC statement there was a brief attempt higher, but when there was no follow through the destination became the prior day's low. An aggressive liquidation ensued pushing through the low and towards the value area low of the range since mid December. The NYSE volume was 4 bn, so not anything particularly heavy. The pace of the liquidation could mean that this has been driven by short term money which can rally it just as fast with short covering.
There is a spike in the profile following the fall so spike rules are in play. I'm taking the top of the spike as 2010.25 and is resistance, with 2008.00 also an important pullback level.
Downward spike rules are in play so:
i) opening and trading above the spike is bullish as this shows rejection and leaves a potential buying tail. This doesn't look likely as at 07:00 ct.
ii) opening within the spike shows acceptance and keeps the break intact. The area between 1996-2000 traded a lot of volume and shows where two-sided trade took place into the cash close, with 1997.00 the HVN.
iii) opening below the spike is bearish as it is a sign the auction has not finished.
Overnight the VAL of the range was tagged and there has been some recovery temporarily.
The overnight range is 1987.75 - 2003.00 as at 07:00 ct, with the high finding resistance at a composite HVN. If there is acceptance below yesterday's settlement then there could be a more serious sell-off targeting the December low and then the composite VPOC at 1957.00.
Jobless claims at 07:30 and pending home sales at 09:00 ct to add to the mix. I'm going to monitor the first hour's trade before getting involved today and be patient for levels.
ES review & plan
There were some heavyweight earnings disappointments driving yesterday's sell-off, notably from CAT and MSFT, down 7 and 9% respectively.
Share volume was only 3.3 bn on the NYSE composite, showing a lack of broad market participation. Futures volume was higher than recent days, with short term traders creating high volatility and closing the RTH gap from the open after pushing down to a composite LVN and 100% extension of the IB range. After hours saw stellar 4th Qtr results from AAPL which is putting a bid in the market again overnight.
The weekly chart shows the current consolidation area within the longer term uptrend. It remains to be seen if this is a top forming or a pause before more upside. The odds favour a move through the poor high that has been formed so far and leave some excess on the auction. The upside objective remains at 2156.00 on the long term chart, should the market accept above the current highs.
The 4 hour chart shows in detail the current bracket the market is trading within, which is above the mid point and VPOC.
The overnight globex trade has hit Monday's VPOC and sold off to just below yesterday's settlement. Short term value has dropped lower for the past 3 days. The composite high volume area between 2026.00-2029.00 is a key bull/bear zone for me today. The FOMC release their statement at 1pm ct.
ES review & plan
Friday failed to break Thursday's highs and consolidated within the thin area of trade from that day. Volume was just 1.3m contracts and 3.6 bn shares traded on NYSE.
The range that has formed since the 16th Dec low has a value area low and high between 1985.50 - 2050.50 and a VPOC at 2018.50. Last week saw a push above value to the prominent HVN at 2060.00 and swing high from 9th Jan at 2062.00, but these were swiftly rejected.
The Sunday night opening of the electronic session gapped lower following the news that the anti-austerity Greek party, Syriza, had gained a majority in the elections. This saw fresh lows in EURUSD to 1.1102.
The overnight range is 2025.50 - 2046.75 on volume of about 200k as at 07:00 ct.
Will be looking for a retest of the micro-composite VAH and a move lower after.
Levels of Interest:
ES review & plan
There was an early test of Tuesday's POC and stopped a tick above the VPOC after the open, and then swiftly reversed leaving a long buying tail. A leak of the expected ECB announcement pushed prices above a high volume area on the composite profile and settled within it.
The upside and downside targets depend very much on whether prices hold above or below the composite high volume area between 2026-2030. We're going to see longer timeframe money in the market today after the ECB news which lowers the odds that short term traders will be moving prices off of day timeframe references. The composite volume profile should provide areas to lean on to enter on a pullback of a move.
Overnight the market has moved higher again, along with crude. Bonds and the dollar have sold off. The ECB decision is at 06:45 ct with the press conference at 07:30 ct, along with jobless claims.
ES review & plan
There is a lot of uncertainty in the market currently which is the cause for the increased volatility and lower liquidity. Yesterday gapped open above Friday but failed to reach the overnight high, and then saw liquidation and push down to retrace 50% of the Friday low- Tuesday high swing. There was responsive buying and a push to close above Friday's VPOC.
We are trading within the value area created since the December low and all time high. For buyers to be in control they will need to trade and hold above 2030.00 (LVN on micro composite profile and top of HVA on composite profile). The Jan 13th nVPOC at 2048.00 is the next upside target after that.
The overnight range is currently 2008.00-2021.50 on fairly light volume. I'm expecting a test of yesterday's POC (2006.75) & VPOC (2005.00) before any attempt higher. If volume begins to build below 2000.00 then 1995.00 (micro compsite VPOC), then Friday's low at 1981.25 are the next targets. Below there the 1961.25 December low then 1957.00 composite VPOC and 100% measured swing move are next targets.
Housing starts at 07:30 ct
ES review & plan
Friday saw a move down to the exact low of Wednesday's RTH session and reversed, a sign more that short term traders were in control. Going into the long weekend there was a push higher and a late break to settle above Thursday's open, together with the VPOC on the day. We saw no follow through on the downside early in the day as the risk going into this risk could be to the upside with the ECB QE announcement likely this Thursday. There has been a lot of discounting already in terms of European bond yields and the weakness of the currency, so it's possible we see an unwinding of that short term after the news.
Overnight the market has pushed higher, driven mainly by the European indices. The range is 2003.00-2026.50 against Friday's settlement of 2013.00.
The range formed over the past week or so has a value area high coinciding with the overnight high. It remains to be seen whether there is responsive selling back into value or not. Overnight inventory is long and we are currently set to gap open to the upside, so gap trading rules apply.
If there is acceptance above the overnight high, 2026-2029 is a high volume area on the composite profile which, if cleared, should pave the way for a fast rally through last Tuesday's thin distribution and towards it's VPOC at 2048.00