ES review & plan
Day traders appeared to dominate the action again yesterday with volumes still very low at 1.1m contracts and 3.25bn shares on NYSE. Buyers do still have control above the prior all time high breakout of 2089.75. There was a brief attempt lower after the open and responsive buyers reversed a tick above the overnight low and took prices to exactly the overnight high, which is a new all time high for the RTH session. There was no follow through but value shifted slightly higher and the micro composite VPOC of the range of the past week has moved up to 2093.50.
The micro composite value area is currently 2089.25-2096.50, with 2093.50 the VPOC. There is still a long bias in the market, albeit on poor volume and breadth. Acceptance above the current value area high increases the odds of a breakout through 2100. The current auction does not look complete with only 2 ticks of excess on the highs. I think it's dangerous to short up here unless we break down through 2089.75 and retest the level from below and fail. This would then target the open RTH range gap below.
There is continuing headline risk from Greece adding volatility overnight. PMI manufacturing index is at 8:45am ct.
ES review & plan
Yesterday was a non-event in terms of trading. Volumes were dire at just 1m contracts and 3.3bn shares on NYSE. The market remains neutral within the small balance area of the past week.
The continuing low volumes and lack of apparent new buying interest is giving further likelihood for a corrective move. Market generated information will provide the evidence for this, and until it breaks out of balance and retests either way, I'm neutral on direction even though my gut feeling is we are setting up for a correction.
Overnight the market hit a new high and then was knocked by news that Germany have rejected Greece's latest proposal. The overnight range is 2087.25-2099.50.
Acceptance under the prior all time high at 2089.75 will set the market up for a possible liquidation targeting the open gap and high volume areas below:
ES review & plan
It appears that the new highs in the market are not attracting buyers with volumes low at 1.2m contracts and just 3.3bn shares on NYSE. Yesterday's new high was not supported by internals and there was little confidence or continuation in it's action. The RTH low tagged the VAL from Friday and reversed, a sign that short term traders were dominant. Value did shift higher with the settle at 2096.00 matching the POC after a shift higher in the last half an hour of trade.
The market is on a weak footing in my opinion, rising on low volume and failing to test support on the climb higher. Failure to hold above last night's settle could lead to a well needed push and test lower.
Housing Starts and PPI came out lower than estimates at 7:30am ct. Industrial Production is at 8:15am and the FOMC minutes are released at 1pm. Overnight the market is net short and I'm waiting for more evidence of direction once we open.
ES review & plan
Friday's new all time high was on very low volume in futures and the underlying cash market with just 1.2m contracts traded and 3.5bn shares on NYSE.
Scenario 2 played out with a test into Thursday's range, finding responsive buyers at an LVN under the VPOC. Shorts rapidly covered taking the index to new highs and closing above the prior high.
News that talks with Greece and the Eurozone have reached a stalemate has had a fairly muted reaction overnight, though it would have been a miracle if they had done deal. The deadline is now Friday for Greece to reach an agreement...good luck with that one!
Continued strength above the current highs leaves just measured moves as targets, and the only one I'm interested in at the moment remains the monthly 161.8% extended retracement of the Oct '07 - Mar '09 swing, which is at 2156.00.
Failure to hold above the 2088.75 level could see some liquidation and a retest of lower levels. The zones based on the composite volume profile and recent support/resistance levels are as follows:
A look at the RTH session's TPOs shows weak structure on this latest run-up. Closing the gap and testing buyer's support in the 2062-64 area would be favourable before a move higher.
It's a light economic data day in the US with Empire State Manufacturing Survey and Housing Index at 7.30am ct. Philly Fed President Charles Plosser is talking at 11.45am ct on the economic outlook and monetary policy.
Friday's VPOC at 2088.50 (1 tick under the prior all time high) will be an important pivot for direction.
Initial resistance above is the 2092.25-94.50 zone, then the 2099-2101 psychological level.
Initial support I see at 2081.50-82.75, 2074.25-75.25 and 2061.75-63.75
ES review & plan
Buyers were firmly in the driving seat yesterday after opening above Wednesday's high and failing to fill the gap. It was a slow and grinding move up on modest volume of 1.4m contracts and 3.8bn shares on NYSE. Internals were strong with the advances-declines between 1500-1700 all day and the tick staying above zero for the majority of the time. Any new shorts added fuel to the grind higher. Settle at 2084.00 was also the VPOC on the day.
Overnight the market has continued higher and taken out the all time high with buyers still firmly in control. There's no major economic data scheduled and a long weekend ahead for the US. The market is one-timeframing higher on the daily basis.
My expected scenarios for today's RTH session are:
1. We see a small test lower into yesterday's range and then rally through the all time highs and then see liquidation into the close ahead of the long weekend. The open gap and naked POC/VPOC below as potential targets.
2. We test lower and drive to new highs and hold above the 2088.75 level shifting value higher and accepting the breakout.
3. The least likely I think today is that the all time high doesn't get taken out in the RTH session and a liquidation break fills the gap and tests the naked VPOC/POC.
2084.00 will be an important level to hold for buyers today. The shallow afternoon pullback low yesterday was 2081.75, which was tested at the globex open overnight. If the overnight low at 2081.50 breaks then we may get a break and opportunity to buy at the 1975.25 LVN:
Acceptance of the breakout puts the long term target back in the sights, being 2156.00 - the 161.8% extended retracement of the Oct '07 high to Mar '09 low.
ES review & plan
Yesterday's trade was balanced in the upper distribution of Tuesday's trade for most of the day. Internals were weak and cumulative delta negative with the market trying to break to Tuesday's high but buyers failed to hold and above the overnight high and a liquidation break took prices down just below Tuesday's open. Responsive buyers stepped in and news from Europe on Greece and Ukraine saw shorts cover and buyers drove through the prior high. Volume and internals were still not supporting the move and there was some give back into the close.
The short term trend is higher and the market is accepting above the value area of the range since December. The all time highs look set to be broken, which has been the high odds scenario given the poor highs that were left there. However, volume has been low on this rally of the past few days.
The next major resistance zone is 2079.75-2082.75, ahead of the 2088.75 all time high. Failure up there sees support at 2068.00-2066.00, then 2055.50-2053.50
Overnight the range is 2058.50-2077.75 with value above yesterday.
ES review & plan
The market pushed higher yesterday following news of a potential 6 month delay for Greece meeting it's obligations. Volume was below average at 1.3m contracts and 3.6bn shares on NYSE and the internals were not overly strong, however.
There is a double distribution left in yesterday's profile with single ticks between 2058.75-2061.25. This is a bull/bear zone for today's RTH session.
Building above yesterday's VPOC should lead to another attempt at the breakout to new highs but acceptance below the bull/bear zone should target yesterday's lows.
Overnight the market has been in a narrow range (2057.75-2064.00), with the bulk of trade within the single print area of yesterday's RTH profile. There is no major economic data due but the Fed's Fisher is speaking on monetary policy at 7am ct.
A break of the bull/bear zone sees initial support at 2053.50-2055.00 and initial resistance at 2064.00 - 2066.50.
ES review & plan
Low futures volume and low share volume with the NYSE trading just 3.5 bn shares left a fairly narrow range. The early low of the RTH session was poor and had a high chance of being retested after the overnight high was taken out but could not be held above.
The market is in a difficult zone to trade currently after the failed breakout on Friday. The bias is to sell rallies after that failed breakout attempt and now it is back within the value area of the current range. Below 2040 there is a high volume area between 2026-29.50 as initial potential support and 2030.50 the initial target (last Weds settlement).
ES review & plan
Friday's failed breakout above the 2060-62.50 resistance zone had signs that the market had got too long short term and saw a liquidation break in the afternoon to within a tick of Thursday's open.
Overnight has been weak after Chinese data and Greek concerns with a range of 2038.75-2050.50, below Friday's settlement. The only major US economic data this week is Retail Sales and Jobless Claims on Thursday. The market is trading back within the value area of the current range and trade is likely to be driven by headlines.
ES review & plan
Value has shifted higher progressively this week with smaller ranges and more prominent POCs. Yesterday's steady move higher leaves single prints below the overnight high which we may see retested. The market overnight was short and there was a strong correction to that inventory before the open. Advances-Declines remained strong all day but NYSE volume was just 3.8bn shares and just 1.3m ES contracts traded - understandable ahead of today's NFP.
The market is trading above the VAH of the current micro-composite range. It is up against important resistance at 2060-62.50. There is likely to be rapid short covering if shorts fail to hold the level or rapid liquidation if longs fail to break it.
Overnight the market has been trading in a small range ahead of the employment report at 07:30 ct. There are naked POC/VPOCs lower from earlier this week to retest on any break below 2047.75. The 2060-62.50 area is a key zone for today and I'll wait to see any signs of longer term players stepping in to drive the direction.
Levels of Interest: