Review & Plan - Wednesday
Yesterday pushed lower into last Thursday's range but did not take out the poor low from that day.
Short term bias remains with longs above the micro bull/bear zone shown below. Targets/potential resistance/support above and below that zone.
The regular trading hours range gap from the beginning of the year remains open from 2014.25-2030.25
Review & Plan - Tuesday
The week has got off to a strong start with Monday's extension higher being on strong volume. The share volume on NYSE was the second highest of the year at 6.02bn shares. Yesterday was much lighter volume and an inside day with a small range, but bulls still continue to have the short term bias.
We may continue to balance within the range from Monday, and this would increase the potential energy of a move when it breaks.
Overnight so far has seen relatively low volume with a range of 1980.75-2000.25 versus settlement at 1999.00.
My main expectation today is for attempted continuation higher, though if we see low relative volume with the move this may be short lived.
The top chart shows the regular trading hours daily bars and there still remains a large gap from the break lower at the beginning of the year. This range gap is from 2014.25-2030.25, and the settlement gap at 2035.50.
Zones for today are below. We could see a short term liquidation break below the 1980-82.25 bull/bear zone in my view, but this will be dependent on volume/momentum/order flow etc. should it start trading there.
Review & Plan March 3rd
The market balanced higher yesterday closing near the highs again, leaving a poor high which has good odds of being taken out during regular trading hours.
From yesterday's plan: "the key area for longs to defend initially would be yesterdays VPOC and high volume area from 1965.50-68.50. Holding this would keep buyers in control short term"
We can see the movement between the first support and resistance zones from yesterday below. There was some bullish TICK and cumulative delta divergence on the low.
Overnight has been a narrow range so far between 1978.50-87.75 versus settlement at 1983.50, and has been relatively low volume.
The hourly Globex chart shows how value is developing since mid Feb. Currently, clearly accepting above value and short term imbalanced higher with bullish price action. However, the move higher has also been supported with rapid short covering, which has left some weak structure below and potential exhaustion of buyers at higher prices
Zones haven't changed for today apart from 1980.00-82.25 become potential support from resistance. I've raised the micro bull/bear up to the 1965.00-68.50 zone as we could see a short term liquidation move lower underneath there, where longs from yesterday will be trapped. Holding that zone continues to keep bulls in control short term.
1990.75-92.75 is potentially the toughest area to break through above, which coincides with a composite LVN, a swing high from Jan 7th and in the breakdown area from the bottom of the range formed from October to December last year.
Review & Plan March 2nd
Yesterday's plan pointed out the importance of breaking either the 21.25-23.25 support or 47.75-49.75 resistance zones to continued direction.
The open attempted to move into the break down area from the prior day, but there was little follow through and bullish internals in the NYSE TICK and advance/decline supporting longs.
The move higher looked to squeeze shorts out, which is evident by the anomalies shown above. The more shorts that kept trying to fade the trend, the more this helped the trend as their buy stops become targets for the big players to accelerate the move.
The market one time framed for the full session, closing on the highs. The open range gap from the Jan 6th to 7th break lower was closed between 1969.00-71.50. The next reference above is the naked VPOC/POC from Jan 6th at 1985.00/85.75, which the market has nearly hit overnight.
Volume was 2.03m contracts and 4.8bn shares on NYSE.
Overnight the range is currently 1971.25-1984.50 versus settlement at 1978.00. The swing high from Jan 7th at 1991.00 would be the next key target for longs to push above and get back inside the balance area from mid October to December last year.
The immediate hurdle above would be the composite low volume area at 1980-82.25, which is where the major break down occurred at the start of the year. This could see responsive sellers step in to defend. Above there, the 1990.75-92.75 zone is the next major area to defend for shorts or open up for a move towards the composite HVN at 2015.00 and Jan 5th high at 2017.00.
Below, the key area for longs to defend initially would be yesterdays VPOC and high volume area from 1965.50-68.50. Holding this would keep buyers in control short term. Below there the weak structure caused by the short covering has potential to get filled in down to the 1946.50-48.75 zone, which would be the last support zone I'd consider any longs, so this would be my micro bull/bear zone as well today.
Zones for today and anticipated reactions below:
Review & Plan March 1st
Yesterday saw a failed attempt by longs to maintain control. The morning trade left a poor low and rotated between the first support/resistance zones before a break higher away from balance to hit the next resistance zone, with notable TICK divergence on the high. The lack of follow through by longs eventually led to a liquidation break and return to take out the poor low from the morning and overnight low at the close, leaving sellers in control.
Overnight the market has traded between 1920.75-1947.75 versus settlement at 1929.50.
I have not changed the zones from yesterday for today, though have highlighted the 21.25-23.25 as a key bull/bear area where I believe the market may liquidate longs and target the zones below.
Here are the zones on the split session profiles (overnight and regular trading hours). As you can see so far the market has found support at the 21.25-23.25 zone and moved back to the 47.75-49.75 zone, where it is currently balancing below. I'm expecting these two zones to be key today for continued direction if broken, or for two-sided traded inside that range.
February Review
With February now gone, click this link for the stats for the month.
A quick review of last month shows the range and volumes have contracted compared to January. E.G. Average Jan Globex range and volume 51.25 points & 2.52m contracts vs 36.75 points & 2.15m contracts for Feb - a drop of 28 and 15% respectively as the Vix fell back from around 30 to 20.
SPDR performance for February below:
1 month Performance
Despite the surge in commodities last month, the year to date picture below shows clear outperformance by the defensive consumer staples and utilities sectors, which is usually seen as a leading indicator of a contraction/recession in the business cycle.
Here are the past 3 months time and volume profiles. February made a new low for the year which has failed to be hit during regular trading hours. The value area marginally overlapped higher to January and the time and volume POC shifted higher just over 30 points.
A look at the monthly bar chart below shows the long term range the market is currently trading within. The next major low is from October '14 at 1774.25 (back-adjusted). This is the longest the market has traded below it's 20 month SMA since 2009.
Review & Plan Feb 29th
Last week continued the short term trend higher. The weekly Globex time and volume profiles above show the range extremes and VPOC values. You can see the current profile on the right starting this week is trading around the time and volume point of control from last week.
The daily Globex chart above shows the customised profile (left) of the range since the August '14 low to date. The market continues to hold above the 1920.00 VPOC and composite high volume node (CHVN). The new monthly high made on Friday fell close to the 61.8% retracement of the major swing shown above.
We can see on the regular trading hours chart above the open gap and naked VPOCs (purple).
Friday's profile below moved value higher again, though the market failed to hit the overnight high and made it's RTH high near the open and low near the close. Range and volume was below average for the month. February market stats can be seen here.
Going into today, we can see below custom profile of the range formed since the Feb 16th pullback low following the last open gap up. The overnight range is currently 1927.75-1948.00, with 1948.25 being the 50% pullback from Friday's high to the overnight low. Holding above there increases the likelihood of more upside continuation towards the 1980.00-82.25 zone (derived from the fib ext. retracement level and composite low volume node (CLVN) )
Zones I'm using today are below. If we don't see the market hold the 1941.25-42.25 support zone we could see some short term weakness/liquidation going into the end of the month. Holding below the overnight low could see sellers press towards the 1906.75-09.75 zoneand 1898.50-90.50.potentially.
If 41.25-42.25 holds and the overnight high is broken and held above, then we could see Friday's overnight high targeted and attempted continuation higher towards the 1980.00-82.25 zone.
The absence of data today may see balanced trade back towards the 1920.00 CHVN.
Review & Plan Feb 26th
Yesterday's overnight market balanced above the daily time frame CHVN at 1920. There was little effort by sellers after the open, despite the price drop from the opening swing high. down to the 1921.25-23.25 support zone.
Underlying internals were not supporting a sell-off and once delta turned positive the market trended higher for the rest of the session.
The market has left weak structure below yesterday's low after the short covering rally left many anomalies in Wednesday's profile. (see yesterday's note)
The daily chart below shows the move away from the CHVN and range VPOC at 1920.00. This has continued higher overnight with the range currently 1948.00-68.75 versus settlement at 1950.50
The hourly chart below shows the breakout from the recent range and fib extended retracement levels for potential measured moves. If buyers continue to press this I'm looking for the 1979-82 area to get tested.
A look back to the January 6th/7th profiles shows the overnight high stopping 1 tick under the bottom of the small gap left between those days, and the nVPOC and settlement references above:
Zones I'm using today are below. Short term bias continues to the upside though the market needs to see good volume with the move if this is going to have any legs. Lots of data due today here. Below the 1947.75-49.75 zone we could see a short term liquidation move back through yesterday's range. The 31.50-33.25 zone will be key for bulls to hold.
Review & Plan Feb 25th
The gap down overnight yesterday saw the market get too short in the day time frame and we saw another aggressive short covering rally after the low was in and prices traded back inside Tuesday's range to fill the overnight range gap and push back above the prior day's value area. As you can see below on the RTH chart, 2 of the gaps below have now been filled after retracing just through the 38.2% level to cover several naked VPOCs.
The structure left in yesterday's market profile shows many anomalies, which was a sign of the forcing action seen during short covering rallies. These areas highlighted below have a high chance of being revisited.
Daily time frame shows acceptance above the 1920 VPOC, with next major target the 1980 composite low volume area:
The 60 min time frame shows acceptance above current value, so either we see responsive sellers push back down through value or continuation of acceptance above value towards measured targets below. There is also confluence with the 161.8% level at 1979.00 and the composite low volume area.
Zones for today are below. I'm using the 1906.75-09.75 as my bull/bear zone, as longs would still be able to maintain control above there. There's a risk of a more serious liquidation below 1898.50. If the market can hold above the 1941.25-42.25 zone, then I'm looking for an attempt to push for the 1955.25-57.25 zone.
Overnight has ranged between 1920.25-38.50 versus settlement at 1930.25. The market moved very fast on short covering yesterday, so I'm prepared to see a push lower into the anomalies shown on the market profile before continuation higher, or if the continuation happens after the open and responsive sellers step in at the resistance zones, then a move lower to fill in the anomalies.
Review & Plan Feb 24th
Yesterday's early rejection of prior value at the 1937-39 resistance zone saw a move to fill the first of three range gaps in RTH and settle within at 1916.00, within the 1915.50-17.50 support zone.
Volume was low at 1.59m contracts and the second lowest volume of the year on NYSE at 3.87bn shares. The reversal of the recent rally in crude was the biggest drag on the index:
Overnight we saw continuation lower immediately following crude API inventories after hours. This has seen a move lower to test the Feb 19th low. The range is currently 1896.00-1920.25 and looking to open on a large gap lower.
Yesterday's note pointed out the gap areas to fill below here.
On the larger time frame the market is rotating around the daily CHVN and range VPOC at 1920.00.
On the smaller range since the January lows, the market is gravitating towards the 1890.00 mcVPOC and monthly VWAP at 1882.00
Zones I'm using today are below and primary expectation is for an attempt to fill the overnight gap above before moving lower.