ES review & plan
Following Friday's trend day, we saw light balanced trade yesterday with an upward drift following the early tag of the prior settle. Price moved briefly into the single print zone from Friday but stopped at the VAH. Short term traders were in control no doubt given the low volume and responsiveness at levels.
Overnight has been weak, taking out Friday's low, not helped by weaker than expected China PPI. The 2060-62 zone is a high volume area and the natural target initially. A break of this would put the 2044-46 zone as the next major target. This is a high volume area from the Dec-Feb range, a 50% pullback into the Feb move and a 100% projection of the Friday impulse move from yesterday's high.
The overnight range 2 hours before the open is 2058.75-2078.00, with inventory heavily short going into the open and range gapping lower currently. Gap rules will likely be in play today. 2059.00 is a 61.8% projection of the impulse move from Friday.
If the market finds support at the 2060-62 zone and begins to accept back in within Friday's range, the daily profile levels and resistance zones come into play.
ES review & plan
Yesterday opened within the lower distribution of Tuesday and moved up to a tick below the bull/bear zone before reversing and driving lower through the value area of the Feb 12th-20th micro composite. Yesterday's mid-point at 2092.50 separates the two main volume distributions and was the lunchtime pullback low after the rally - key pivot to carry forward today.
The market is still in an overall bullish trend within a balance zone above the breakout level of 2088.75.
Draghi has been on the wires to say that QE buying begins Mar 9th, and inflation and growth forecasts increased for 2016.
The overnight range is 2094.50-2103.50. We may see some higher volume from longer term money following confirmation of the timing and amount of euro QE. I'll be looking to use the support zones for long entry setups.
ES review & plan
We finally saw a break from balance yesterday and the prior zones played out well, but volumes are still low at 1.3m contracts and 3.2bn shares on NYSE. The move lower went to the midpoint of the breakout day on Feb 20th. There was no continuation and shorts covered back into the prior balance range but below the overnight low.
Overnight has been weaker, trading within the lower part of yesterday's range. The dollar continues skyward and the euro is lower following marginally weaker than expected PMIs from the Eurozone. ADP employment came in under expectations, giving bonds a small bounce after their 4 point sell off of the past few days. There is the ISM non-manufacturing index at 9am ct and the Beige Book at 1pm ct of note. Volumes still maybe low ahead of tomorrow's ECB meeting. In the short term, the micro bull/bear zone I'm using is 2099.75-2101.75.
ES review & plan
The pre-market test of yesterday's bull/bear zone held and once prices were held above the 2103 HVN, longs had control up into the close. The long tail of single prints left in the first period was briefly tested at 2107, but not pressed any further as shorts were no doubt covering. This appeared to be evident in the closing few minutes as a squeeze saw high volume absorption at 2114.75/15.
Total volume has not picked up at just over 1m contracts and 3.4bn shares on NYSE.
Overnight has been quiet so far in a narrow range with negative delta. The HVN from last night's close and the current VPOC of the balance area the market is currently in at 2115 and 2110.75 are short term pivots to watch.
Initial breakout measured targets above the 2117.75 all time high are 2122.50 and 2128.50.
The major long term target remains 2156.00, only about 2% above current levels. It will be interesting to see if the market reacts at that long term fib level, and if so we may see some bigger liquidations.
ES review & plan
Another low volume day on Friday within balance of the past week. Movement at the end of the month saw some two-sided trade late on so we failed to see one side take control. It was a very low volume week overall but this is likely to change this week with lots of economic numbers and central banks announcing. We expect to see the market balance then make a directional imbalanced move, then balance again. The last week has been stuck in balance so the odds of seeing a directional move this week are high, especially with the ECB announcement on Thursday regarding QE.
Last week's RTH profile showing value between 2104-2112 with POC at 2110 (VPOC at 2109). There is also a notable HVN at 2103 which longs will need to defend.
There has been little reaction to the news that the PBoC cut rates over the weekend and Euro manufacturing PMI came out slightly weaker than estimated. The overnight range is currently 2103.25-2109.25, with Friday's settle at 2102.75. There are US personal income and ISM manufacturing numbers out at 7.30 & 9.00 ct.
I'm watching to see if we still accept last week's value area for a move up or fail below 2103 for a further test to the downside.
ES review& plan
Yesterday was a rotational day with breakout attempts to the downside after failure to push past Wednesday's open. A poor low was left early in the day which was taken out in the afternoon, but the bullish bias in the market saw prices brought back up to settle near the POC/VPOC of the day. Volume is still low at 1.1m contracts and 3.4bn shares on NYSE.
There is excess left in the single prints from 2101.50-2103.00. If we begin to trade back in that zone, there maybe an attempt to push lower to the top of the prior balance value high or if that attempt fails then the highs look set for another challenge, if in that sequence.
Bulls still remain in control and we are currently at the low of value for the current range. The initial upside resistance I see as 2108.25 LVN, 2111.25-13.25, then 2116.50-17.75. Short term projected targets above are 2122.25, then 2127.75.
Failure to hold the micro bull/bear zone at 2101.50-03.00 could lead to a flush through the low volume 2100 area to test support at the top of the previous balance value high zone at 2096-97.50, then 2091-2089.00.
The breakout prior all-time high at 2089.75 is a major bull/bear level. Acceptance below here and through the Feb 20 low at 2082.25 could see the poor structure below retested and gaps filled down towards the 2060-64 high volume support area.
Overnight the range has been tight at 2105.25 - 2109.50 on low volume. There are 3 Fed speakers today (Fisher, Dudley & Mester), GDP at 7.30, Chicago PMI at 8.45, consumer sentiment and pending home sales index at 9.00 ct.
ES review & plan
Another very low volume day, another all time high. The NYSE traded just 3.3bn shares on another slow grind day. The early morning low found buyers at the prior day's VAL, a sign day traders were once again in control. Once prices began to accept at and above the prior day's VPOC of 2113.25, the breakout targets were 2117.75 and 2120.00. Buyers dried up quickly at the first target and the weak longs liquidated bringing shorts in to drive under the 2113.25 support and taking out the low. There was no follow through with a covering move back to the mid-point of the day.
We are likely to see more of a break under 2106.25 (Tuesday's open and morning pullback low). Will be looking for shorts on a move through and failed retest of that level.
Overnight we have had German unemployment and UK GDP match expectations, and slightly better than expected EU economic sentiment. US (&CA) CPI, Durable Goods and Jobless Claims are at 7:30am ct so trade likely to be muted ahead of then.
The 2013.25 - 14.75 is the micro bull/bear zone I'm using today. Longs still remain in control overall but patience to wait for lower entry levels maybe needed under this zone, especially as liquidation is likely under 2106.25. Above the 2014.75 level, the prior high and measured moves are short term price objectives.
ES review & plan
Poor consumer confidence saw a short lived break lower to the prior day's VPOC at 2102.75. Prices quickly reversed and took out the prior high. The morning high in the ES at 2014.25 coincided with the 161.8% extended retracement of the Friday high-Monday Low, and then the break lower reversed off the opening price at 2106.25. With volumes still low(only 3.2bn shares on NYSE), short term/day traders appeared to remain in control. Once the developing POC was trading above the prior all time high, longs pressed shorts to another new high.
Yields dropped across the curve following Yellen's testimony to the Senate Banking Committee. Today sees her testimony to the House Financial Services Committee at 9am ct, at the same time new home sales is released.
Bulls remain in control still- a bit like the captain of the Titanic was, but we're not quite sure where we are between Southampton and the iceberg!
Overnight the flash PMI manufacturing index from China was slightly better than forecast. Domestic demand in China still looks sluggish and external demand remains uncertain - iceberg, ahoy!! (one of the many lying in wait en route).
The current bullish bias would weaken if we begin to trade back under yesterday's breakout of 2108.75, and we will likely see liquidation under 2106.25. This would target the 2100, 2096 & 2093.25 levels.
Overnight has been slow and low volume so far between 2110.00-2114.25. There's a continuation pattern forming, so we could be looking for new highs again. I'm not looking for shorts unless we break below yesterday's open and fail on a re-test of it from underneath.
ES review & plan
Volume was dire yesterday at under 850k contracts and only 3bn shares traded on NYSE. There were a few attempts to push under 2100 but bulls managed to support the level. A late rally pushed up to just above Friday's VPOC but there was not enough fuel to take out the poor high.
Janet Yellen begins a two day semi-annual testimony on monetary policy to the Senate Banking Committee at 9am ct today, so headline risk is again high. German GDP and the Eurozone inflation rate came in on consensus early this morning. Overnight the Chinese flash PMI is expected, which gives an estimate ahead of the final PMI at the start of the month.
As long as the market can hold above the prior balance area from last week, the poor high from Friday looks likely to get taken out and continue higher. Yesterday's VPOC at 2102.75 is an important level for bulls to defend or we may see an attempt to push back into the prior range and value area between 2089.00-2096.50. As previously written a few times before, I think 2156 is our main objective and potentially an area longer term players will start to unwind. The structure below is weak, however, and a corrective move through last week's low could see a fast, sharp liquidation down to at least the 2060-62 area.
ES weekend review
Friday closed at a new all time high following an attempted break to the downside early which failed to accept below last Friday's RTH low. Agreement on a 4 month extension of the bailout for Greece sent prices higher, after some initial conflicting reports. Volume was low for the range at 1.6m contracts and only 3.2bn shares traded on NYSE. There was a big shift up in the VPOC for the day at the close to leave value overlapping higher after starting the day overlapping lower. There are anomalies in the profile from Friday which I would expect to get repaired during the next RTH session.
The game is only getting started with Greece and I have every confidence that it will all fall apart again in the future. This doesn't help the day trader though as cognitive dissonance can interfere with the market generated information. As we stand, markets want to move higher in the face of ever expanding valuations assuming strong growth for the next few years. A research piece on forward P/Es for the index can be found here for interest.
Quarterly earnings season from the energy sector will be telling in light of the oil price collapse as forward P/Es are the highest in the index at 26.5 versus the 5 year average of 12. The sub-sector breakdown is more telling with drilling at 10.6, equipment & services at 19.4 and the outlier of exploration & production at 75.9! The forward P/E of the index stands at 16.9.
A look at the monthly chart shows the main price objective at 2156.00, being the 161.8% extended retracement of the Oct '07 high to Mar '09 low:
We are one-timeframing higher on the weekly chart and broken out the range we've been in for some time. Last week's high at 2095 and close at 2093.50 are ones to watch:
The daily RTH chart shows the gap still left following the move away from the high volume 2060-65 area. A break of last Friday's low could see a liquidation and filling in of this area.
The 60 min chart shows micro composite value area of the range the market has recently broken away from. Bulls will want to hold above this value area to keep the upper hand.