ES review & plan
Yesterday was another low volume day with 1m contracts and just 2.9bn shares on NYSE trading. The move higher to take out the prior day poor high was on weak internals (TICK, Adv/Dec and cumulative delta). The weak longs liquidated once the March 24th swing high had been tagged. Once prices fell back within the prior day's range, the low of that day became the target. Despite the sell-off, value was left overlapping higher to the prior day.
Overnight the market has tested lower after an initial rally. The range is currently 2079.25-92.75 (yesterday afternoon swing high). Longs will need to defend the 2082-84 area to avoid further liquidation.
PPI and Retail Sales at 7.30ct could set the tone for the day.
ES review & plan
Friday's primary expectation worked out but trade was slow and congested for the most part, apart from the initial move higher. The market looked as if it had got too long in the day timeframe and was at risk of a liquidation break, but this didn't happen. A poor high has been left at 2096.00, and I would expect this to get revisited. Volume was very low on the day at just 880,000 contracts and 3.1bn shares on NYSE. Internals were not particularly strong either, so for the bull move to continue there needs to be more volume and breadth preferably.
Value has shifted higher after the move away from prior balance. For continuation , longs will want to hold above the low of the upper distribution at 2091.25. Acceptance below that could see a test of the 2082.25-84.25 zone, which is my bull/bear zone today. Failure to hold above this area risks a move through last week's balance area and could see a rapid liquidation through the poor structure below it. The next upside profile target is the prominent POC/VPOC from March 23rd at 2102.75/03.00.
Overnight so far the range has been 2089.00-2097.75 versus settlement at 2095.50. There is a fairly busy economic calendar ahead this week, though quiet today. Bond yields are up overnight and the dollar index rallying back towards 100 again.
My expected scenarios today are either:
1. The market holds within Friday's value area and the poor high is taken out for continuation higher.
2. There is a test lower of the bull/bear zone to find responsive buyers and a push back up into Friday's value area.
3. Weak longs liquidate and prices are pushed back down into last weeks balance area below 2082.00.
I'm using the following price action & composite volume profile support/resistance zones in conjunction market profile structure and levels.
ES review & plan
Yesterday opened within the prior range and saw a rapid drive higher to test Wednesday's value area high. This was met by aggressive selling/liquidation and the next objective became the overnight low at 2067.25.
The move lower could have been seen as a false flag in my view as value over the previous few days was shifting higher. The main concern with the move into 2067 again was the number of times that area had been touched, which increases the likelihood it would break. However, a good low was left on the profile and aggressive buying pushed back up to balance around the overnight high for some time before a late push through Tuesday's high. Value was left overlapping higher on the day so odds favour a continuation of the move. Longs will want to remain above the low of the late higher distribution, at 2082.00.
Overnight so far the range is 2083.00-2089.50. There are no tier 1 economic announcements due, but Fed speakers on the wires today are Lacker & Kocherlakota. The dollar index is pushing back towards 100, helped by the jump in yields yesterday following the 30yr bond auction.
My expected scenarios today are:
i) There is a test lower to find responsive buyers and we see imbalance higher to test resistance. The composite volume profile VPOC is at 2084 and the 2094 area should be the next upside target (composite LVN) after breaking through 2089.25 resistance.
ii) The move higher is met with responsive selling at the 2089.25-91.25 zone, and a combination of liquidation and short selling pushes prices back into the balance area of the past few days.
iii) The least likely but still possible I think is for ii) to happen with a break down through 2067 and further liquidation
ES review & plan
Yesterday left a very symmetrical profile overlapping lower relative to Tuesday. The early move higher tested the POC/VPOC and reversed, auctioning below Tuesday's low briefly but came back inside the range. The FOMC minutes did very little to surprise and apart from the low liquidity wide bar following the release, the session remained balanced. A prominent POC was left at 2074.25 which longs will want to hold above for continuation of the short term trend higher away from current balance.
The overnight range is currently 2067.25-78.00, within yesterday's RTH range. Jobless claims are at 7.30ct which will be especially closely monitored given last Friday's NFP release.
The 2065-67 area has been tested and bought several times in the past few days, and this is my bull/bear zone currently. If the market is strong I wouldn't expect a test of the overnight low after the open.
I'm using my support & resistance zones with a long bias, unless we break below the bull/bear zone.
ES review & plan
Monday's rapid rise was fueled by short covering. Yesterday's move pushed through the poor high left on Monday and tested the pullback low from Monday at 2072.25 early on. Once the high was tested again, there was no follow through. Cumulative delta dropped off and although value was moving higher on the day, a lot of the buying power had been taken out of the market after shorts had covered from Monday's rally. The late break lower gathered momentum towards the single prints. Volume was low on the day at 1m contracts and just over 3bn shares on NYSE.
The close was below the overnight low and formed a volume distribution from 2067.25-71.75. Longs will want to be above 2071.75 for a greater chance of testing yesterday's POC/VPOC. Failure to push into yesterday's initial balance increases the likelihood of a push lower towards the prominent POC/VPOC from April 2nd at 2059.25 and through the long spike of single prints.
Overnight so far has traded lower in the range of 2064.50-2073.75 versus settlement at 2067.75. With the FOMC minutes being released at 1pm ct we are likely to see balance forming ahead followed by a break from balance after.
ES review & plan
A look at a daily chart shows the market in the middle of the current range, within 2 larger ranges. While the market remains within this upper range there's still potential for new highs. The high that has been left shows no excess and shows signs the market got tired/overly long. Failure to hold this current range could see an accelerated drop towards the bottom of the next range at 1954.25.
The low following the employment report on Friday was made in electronic hours with the market on holiday. It was completely reversed yesterday and leaves some weak structure in it's path. This is likely to be revisited but the poor high left yesterday could be first in the sights and a break above the Mar 30th high which could accelerate buying.
The overnight range is currently 2070.25-79.25 with settlement at 2073.25. Cumulative delta has been steadily rising with the market net long. If the 2072.25 level breaks (afternoon pullback low) we could see liquidation and a drive through yesterday's range of single prints.
ES review & plan
We had gap trading rules in play yesterday, and the larger the gap the less likely it will be closed on that day. Even after a 10 point range gap there was a drive higher after the open, followed by a slow grind higher for the remainder of the day. As the market got more and more long in the day timeframe the risk of a liquidation break increased, though this didn't happen until the end of the session.
Overnight the market has been weak along with a strong dollar. The range is 2062.25-76.75 currently, testing the top of the RTH gap. I'm expecting more of a push lower into the gap and for trade test the bull/bear zone and potentially lower support at 51.75-54.75. Failure to trade though bull/bear zone would put first overhead resistance at 69.00-70.75.
ES review & plan
Friday was an extremely balanced inside day leaving an almost textbook normal distribution of the market profile. The overnight high or low was not tested, but overall value built above the prior day's VPOC/POC leaving a small buying tail and a poor high.
Overnight there has been a break higher through Thursday's 2058.75 high. The range is currently 2047.25-69.00. It's a shortened week and quarter end tomorrow. German CPI is at 7am ct and US Person Income & Outlays at 7.30am ct.
Holding above the breakout of 2058.75 puts bulls in control. Above 2069.75 there are potential buy stops from last Wednesday's spike down. I'm looking for long opportunities (above 58.75) on pullbacks to support zones/dynamic intra-day support.
ES review & plan
Yesterday's overnight low attempted to test the swing low from Mach 11th but found responsive buyers ahead of it. There was a failed attempt towards the overnight low during RTH but a buying tail was left and buyers dominated pushing back to close the gap and breach the overnight high. Volume was up at 1.8m contracts and a pivotal area going into today is where settlement, VPOC & POC are located, plus the pullback low at 2046.50.
If longs can hold above yesterday's value we could see a more aggressive short covering rally and if longs fail to hold above the pivotal area a more aggressive liquidation through the month swing lows could be seen. GDP is due at 7.30am ct and with a data dependent Fed the market will be seeing a weak number as short term bullish for indices & bonds, bearish for the dollar and vice-versa.
Overnight the range is currently 2041.00-2057.75. The bull/bear zone today is 2046.50-49.50 and will cautious of buying the near term support as the market has been to this area several times and the odds of a breakout to the downside are increasing. The initial measured target is 2010.25. If the market holds above 2052.25 then Wednesday's VPOC becomes the main target, with potential for an aggressive covering move above 2069.25.
ES review & plan
The early attempt to move higher through the overnight high failed after the open and sellers dominated from then on. Volume was 1.7m contracts in ES and NYSE volume was just 3.5bn shares, much lower than you would expect after such a big move.
I hadn't included a trending down day in my expected scenarios so I had to abandon those as market generated information became more clear. Although market internals were not particularly negative early on, the futures cumulative delta was on a downtrend from the off giving some warning signs to at least not catch the falling knife while the market took back the move on FOMC day going through yesterday's bull/bear zone. The close was heavy and near the lows as you would expect on a trend day. If we do see a move back up, there is a spike above 2069.75 which could trigger some aggressive short covering.
Overnight has continued the steep downtrend towards the bottom of the last month's range. Trade has currently been between 2033.25-2056.50 and looking short term exhausted. However, if the market breaks and holds below the 2030.50 swing low we may see continued liquidation, but there is also potential for a stop run and failed breakout.
Bullard and Lockhart are speaking todayand Jobless Claims are at 7.30am ct.
Expected scenarios for today are either:
1. We test the overnight lows and responsive buyers step in to trade back to last night's close and the market trades between these support/resistance zones.
2. Responsive buyers take out near resistance and target the prior VPOC area
3. We test the 2030.50 swing low and either continue liquidation lower or have a failed breakout and come back into the overnight range.
The market is already very short in the overnight session so we may see a correction to overnight inventory into the open. If we don't this is obviously negative and increases the likelihood of further downside.