ES review & plan
The initial weakness after the open was short lived after failing below the overnight low and to fill the open gap. Responsive buyers took prices back to the 2100 level but failed to get to the prior day's value area. With developing value lower on the day the odds favoured a break lower if there was no follow through from buyers. The weak longs liquidated and the gap close and last Thursday's POC became the target.
Yesterday's low looks unfinished and we could see a test of Thursday's VPOC at 2081.00 and poor low at 2076.50 on weakness. There still are the remaining single prints from Fed day down to 2062.25 where little volume traded. The profile has been left with several anomalies which we may see repaired before any attempt lower.
Yesterday's 2083.50-85.50 support zone held into the close. We may see some back and fill and test of the nearest resistance zone at 2093.25-2095.25 before a move lower. Overnight the market has been balanced in a range between 2082.75-88.25 so far. Charles Evans is giving a speech at 6.30am ct and Durable Goods are due at 8.30am ct. The dollar index has been weak and has been heading back towards the low made on the flash crash last week while bonds yields continue to fall.
The most likely scenarios today I think are either:
1. We balance between near term support and resistance zones.
2. We balance between near term support and resistance zones before an extension lower to test next support.
3. We balance between near term support and resistance before an attempt to push back towards 2100.
ES review & plan
Yesterday held the bullish tone for most of the day but volume was light and lack of follow through from buyers after 1 ticking the prior high led to weak hands liquidating in the afternoon following a failure to break the overnight high again in J period. The break from balance drove to the lower distribution of Friday.
The gap below remains open and bulls will need to hold last night's settle to stop a larger liquidation through the gap towards the untested POC/VPOC from Thursday.
Overnight the range has been 2091.75-2101.00 so far. The overall context remains bullish above the near term support zone. CPI is the main event at 7.30ct and New home Sales at 10am.
The zones remain the same today will be looking for long opportunities above the 2097.00 level, at the top of the late volume distribution yesterday. I'm cautious below and will wait for support to prove itself. Failure below the support zone would give shorting opportunities on a re-test down to the next support zone.
ES review & plan
The March contract expired on the open on Friday and volume for June was up. The stock option expiry at the close pushed stock volumes to a high 5.56bn shares on NYSE (compared to about 3.3bn daily recently).
The gap up open on Friday was never closed and the brief test below the open held above the high volume 2091-92 area from Thursday. The high at 2106.75 coincided with a composite low volume node (cLVN) and closed the settlement gap from March 2nd. I also measure the 127.2% & 161.8% fibonnaci extended retracements on breakouts as high probability targets/pause/exhaustion points. (see Kam's work at www.thetradingframework.com for more info).
The late sell-off has left a poor high, which is probably a sign the market got too long in the day timeframe and there was an inventory correction into the close, with added activity in the options expiring.
There's a prominent VPOC at 2101.00 which will be important for bulls to regain control of. Acceptance below Friday's close would put the open gap in play and VPOC from Thursday. If buyers can hold above 2101.00 then the poor high from Friday and contract high are the next targets. Above there, stops could be triggered and measured moves from wave swing projections are the only targets.
The overnight range so far is 2093.25-2106.00, with the majority of trade below Friday's settle. It remains to be seen if the short inventory overnight is corrected after the open or there is more short term liquidation to go. There is Existing Home Sales data at 9am ct.
The overall context remains bullish so my most likely scenarios today are either:
1. We auction lower into the support zone and find responsive buyers and push back to the VPOC from Friday and challenge the poor high.
2. We balance between the 91.75-93.25 support zone and 2105.75-07.75 resistance zone.
3. We auction lower and initial support fails, so the open gap and next support zone is target for responsive buyers to step in.
ES review & plan
There was an attempt to push through the spike from Wednesday during regular trading hours but buyers still had control above the range breakout below at 2074.75. There is still a vacuum of volume on the way up which has a good chance of being revisited still, but the overall context remains bullish above the micro bull/bear zone currently.
On the profile yesterday the early highs were quickly rejected and there is a poor low where shorts have tried to push through a few times but failed and have been forced to cover. The market appeared to get too short in the day timeframe and returned to value. Overall it remained balanced below the overnight low.
While the market remains above the 2075 level I'm still looking for long opportunities on tests of support/profile levels and possibly fade resistance zones if there is very strong divergence with the market internals, though the bias is bullish for now.
There are no major US economic releases due and Charles Evans and Dennis Lockhart are speaking mid-morning. Quarterly expiry is at the open. Overnight the range is currently 2077.75-2092.00, overlapping higher to yesterday's range.
My expected scenarios for today are either:
1. We continue to balance above yesterday's value area low and push higher above Wednesday's settlement and composite HVN.
2. We fail to push above yesterday's excess high and the prior lows are tested into the micro-bull/bear zone.
3. We fail to push above yesterday's excess high and the prior lows are broken and sellers take control through the single prints from Wednesday.
Day timeframe and market profile references:
ES review & plan
We saw balanced trade ahead of the FOMC release and a brief pullback to the CHVN at 2052.25 before a move back to the VPOC just before the release. The dovish statement was well received and we had directional conviction with the breakout of balance, without much whipsawing action. Internals were strong and volume was 4.1bn shares on the NYSE. With Fed Funds forecasts for the end of this year and next slashed, the credit markets boomed and the 5 & 10 yr notes dropped to 1.38% & 1.91% respectively. There was effectively a flash crash in the dollar, with it falling 3% at one point and HFT shenanigans to blame according to Nanex.
Yesterday's breakout leaves a big spike of single prints. If we open within those single prints we may see balanced two-sided trade while the markets finds short term value. If we hold above the spike there is more chance we'll auction higher towards the all-time high. 2083.25 was the pullback low above the top of the spike. There was heavy volume between 2091-92 into the close and settle was 2092.50. There is a 4 point selling tail excess at the highs.
Overnight there's been a huge correction to the dollar move, almost reversing entirely the fall from yesterday afternoon. There's been some weakness overnight sparked by the SNB cutting growth forecasts and Greece receiving less emergency funding than requested ahead of a debt repayment tomorrow.
The ES range is currently 2086.25-2099.00, still within the upper distribution from yesterday. Jobless claims are at 7.30ct and Philly Fed Survey at 10am ct.
The most likely potential scenarios for today I think are either:
1. The market attempts to find two-sided trade, balancing in a 15-20 point range.
2. The market holds the upper distribution from yesterday and challenges the 2100 level again.
3. There is acceptance within the spike and we see a move towards the micro bull/bear breakout zone of 2072.25-74.75.
In the absence of headline risk, shorts that haven't covered yet and longs that haven't got on board will be keen to get involved on pullbacks, so will probably be just looking for long set ups today,
ES review & plan
Yesterday's expected action was to be balanced ahead of today's FOMC, and it didn't disappoint. There was an attempt to push through all the single prints from Monday but sellers were not aggressive enough. Value was overlapping lower to Monday but remained an inside day.
The nearest resistance zone has been tested several times and would be more likely to break if tested again for a run to 83-85 then 93.75-95.75. The micro bull/bear remains the same for now and will be leaning on that area for a bias. However, ahead of the Fed opportunities may be scarce which offer good risk:reward.
ES review & plan
Buyers regained control overnight yesterday and forced more short covering action after the open. Longs will want to hold above the spike of single prints formed in the first half hour of trade. If we begin to accept within that area again there maybe some liquidation and auctioning lower to find responsive buyers again. The continuing weakness in crude will be a weight on the energy sector.
The poor high from yesterday looks to have been made as a result of the market getting too long in the day timeframe, and we saw a liquidating break into the close. A break above yesterday's high puts the poor high from March 6th at 2086.50 in the sights.
There has been some weakness overnight, testing the globex high from last Friday. The range is 2060.75-70.00 currently. I'm looking for longs above the micro bull/bear zone and shorts if we break down, bounce and fail on a retest into the zone. Context is everything, however. It's pre-FOMC day so we may just attempt to balance above Friday's high. Housing starts are at 7.30 ct.
The nearest major HVN on the composite profile is 2052.25, which maybe a magnet if the market breaks and accepts below the overnight low.
ES review & plan
With rollover beginning yesterday there is distorted volume, but the underlying cash market traded 3.4bn shares on NYSE which is still below the long term average.
Following Wednesday's balanced day, going into yesterday I was looking for a directional move away from the micro bull/bear zone. We got this on the open with a brief test of the prior VPOC then a drive higher, fueled by short covering. Late on in the day, the high from Tuesday and the open gap became the target, which would have been helped by stops. Settle remained above Tuesday's high and a double distribution was left on the profile.
There remains a lot of single prints in A period yesterday and no excess on the low from Wednesday. This leaves the likelihood of a revisit to these areas highly probable. In the short term though, the two distributions from yesterday are important areas of potential support which if they hold could lead to a move back to Monday's POC/VPOC and settle.
I've switched charts to June (ESM15) which has a 7.5 point discount to March.
ESM15
Overnight so far has ranged between 2054.75-61.25. The dollar has recovered from yesterday's sell off, bonds are off and crude continues to get crushed having hit $46.52. PPI is due at 7.30ct and Consumer Sentiment at 9am ct.
Going into today's session I'm using 2058-62 as quite a wide bull/bear zone. This looks to be an inflection point where we saw a breakdown last Friday and this could be a heavily defended area for shorts and a challenge for longs to break.
ES review & plan
We saw balanced two-sided trade yesterday. There was a fair amount of time and volume spent below the overnight low and sellers tried hard to force a breakout. Internals were not overly weak, however. Yesterday's low is poor and looks unfinished. We have yet to see any excess low with this correction in terms of price action or volume. There is also an open gap above which becomes the upside target for bulls if there is a break higher. We are likely to see longer timeframe responsive sellers step in at this area.
There is a prominent POC at 2045.25 which will be a useful pivot. Rollover to June is today but I'm still charting March until the volume changes. The Mar/Jun spread is 7.5 points.
Overnight has ranged between 2038.25-2048.75, finding buyers at the bottom of the first support zone. I'm using 2044.25-46.75 as the micro bull-bear zone, which may be a choppy area in light of the high volume and time spent at that area. Once we find acceptance either side then I'm looking for a directional move either way and using the zones to exit/fade potentially.
Retail sales were much weaker than expected and Jobless Claims came in under consensus. The dollar index hit 100 overnight and has sold off quickly. Bonds are strong with the dollar sell off and the Euro has recovered from it's low of 1.0494 to 1.0645 currently.
ES review & plan
Yesterday's continuation move lower pushed down into a confluence of levels. These were the 50% pullback of February (2045.75), the 100% wave projection of last Friday's move (2044.50) and the micro composite HVN for the Dec 16th-Feb 12th range (2045.00).
Volume has begun to pick up in the June contract as rollover begins tomorrow.
There was relatively high volume into the close leaving a buying tail. If buyers can hold above the 2044.25/50 HVN from last night, then there are decent odds that it will attempt to rally up to at least the top of value and potentially go for the gap. Failure to hold above that HVN could lead to a further liquidation to test lower LVNs and HVNs. There is still a range gap open between 2018.50-2021.00 to bear in mind.
Overnight the range so far is 2042.75 - 2052.25. The euro has continued it's slide to under 1.06 and the dollar index hit 99.50. Bonds have sold off their highs following the big turnaround rally yesterday.There is a 10yr note auction at 12pm ct.