Review & Plan - Thursday
New all time highs for ES and the only time sellers had much joy was after some size aggressive buying into the high saw buyers run out of ammo and we saw a liquidation break into the close (see below).
Overnight has been very balanced in anticipation of news from the ECB and Mario Draghi. Currently 2094.75-2104.00 range versus settlement at 2098.00.
If the 2094.00-96.50 zone holds I'm looking for a continuation higher towards 2110-2112.00 and potentially higher. Acceptance and holding below 2094.00 I would expect a rotation lower towards the 2084-86.00 zone. The last major line of defence short term for bulls is the 2080.50-81.50 zone, in my opinion.
Review & Plan - Wednesday
Yesterday's balanced day built value above the prior day's range and failed to take out either of the Globex extremes, which was a statistical anomaly. A poor high was left after the early attempt at 2100 and sellers failed to hold below the prior day's VPOC for long. The top of the spike from Monday highlighted above is an important area for longs to defend for continuation higher. Acceptance below there could trigger a short term liquidation by weak longs. However, ideally for a sign of bulls strength we should see the 2093.00 area defended today or the odds of rotating down to the 2081.00 area or lower increase.
The daily chart below shows custom volume profiles around the 3 key ranges of the past 6 months. As mentioned yesterday, we still haven't seen a good finish to the upside yet on the long term charts. Call option open interest is highest for June at 2100, and volume has been picking up in the higher strikes as spreads are being possibly rolled up.
The 120 min chart below shows current progress above the past month's range/value:
Zones for today:
Review & Plan - Tuesday
Yesterday's aggressive response by buyers to push through the recent range value area was done on surprisingly low volume - just 1.3m ES traded and 3.3bn shares on NYSE. The price action was undeniably very bullish, but the lack of volume overall and very long tail of single prints is an important take away. The poor high and settle near the close is a sign the upside auction isn't finished, which has been seen overnight.
A look below at the order flow in the first 30 mins of trade shows the strong delta plus size bid absorption ahead of the push through the recent range VPOC at 2075.50. Shorts continued to get squeezed which helps the momentum as they are stopped out.
The long term auction on the S&P still hasn't shown any indication of being complete to the upside. The all time high doesn't show any signs of a blow-off top or any significant excess, nor have we got to the stage of the herd all being long equities, far from it. I'm not one for market predictions as they cloud the mind for day trading, but there is a scenario the market could be trading at 2200 by next week if the big money steps up to squeeze the retail shorts out of the market and panic into buying.
Overnight so far the range is 2084.75-2098.50, continuing higher above yesterday's range. The back adjusted all time high is at 2100.00 which looks to have a very high probability of being tested as next major resistance. This level also carries the highest call option open interest for the June series.
Zones of interest for today:
Review & Plan - Monday
Friday was another low volume, low volatility, small range day which left value on the day overlapping lower. The RTH chart above shows the naked VPOCs and open gap during the US session.
Overnight trade opened on a gap lower following the crude oil meeting in Doha, which traded down up to $3 in the early Asian session.
Overnight so far ES has ranged between 2058.50 (rth range gap high from April 12th high) to 2072.75 (rth VAL on Friday). A descending channel has formed on the 60min chart below which may see sellers active at the upper band, though a break and hold above will show buyers dominance and potential continuation higher from this flag formation. If price begins to accept below the composite VPOC and top of the range VAL then I would anticipate further weakness towards the range VPOC at 2040.50.
2075.50 remains the bull/bear level for me today, which is the HVN of the last few days trade visible in the top left corner below. Crude is going to be a dominant factor for ES today, plus keeping a close eye on the Yen futures which have had a recent inverse correlation with the market.
Plan for today:
Short term bias in bearish within a longer term bullish structure. The bull/bear zone for me today is 2074.50-76.00 so I'm anticipating sellers to be active into that zone or below broken support areas. If the RTH gap is filled during the day session, this is an area for longs to defend and push back above the 2061.50 composite VPOC. If we see longs fail to hold that area I would expect a liquidation move lower towards 2040.50.
Zones for today:
Review & Plan - Friday
Plan for Today:
Overnight has shown negative flow and ranged from 2080.00-2071.75 so far (yesterday's RTH low).
Short term balance is around the 2075.50 HVN, which will be my intraday bull/bear level.
The poor low from yesterday is being tested overnight which if broken could see stops elected and shorts push into target the 66.75-69, 61.50-63.50 and the 55.25-57.50 zones. This would still keep the longer term bull move intact, but acceptance below there could see a move back down through the longer term value area.
A move back above 2075.50 puts bulls back in control to target the upper zones, though there needs to be more volume and momentum than we've seen recently. Zones for today are below:
Review & Plan - Thursday
Yesterday's break higher above recent balance has left an RTH range gap between 2058.50-64.00. The day was slow moving but buyers defended strongly, eventually leading to a late move higher. A prominent VPOC was left at 2068.50, which has been the overnight low so far. There was also significant volume around the 2075.50 level into the close, which settled at 2076.00
The longer term chart below shows where we are in relation to the range from the end of last year, pushing up towards the top of value of that range and towards the edge of a shelf of volume on the composite profile.
Plan for Today:
The range overnight has been 2068.50-2076.50 so far, within yesterday's range and maintaining bullish support. Holding above 2076.00 paves the way for a push to the 2083.00-85.00 zone. Above there, the Nov '14 back adjusted high at 2092.75 and then the all time high.
Failing below the overnight low (prior VPOC), could see some short term weakness to attempt to close the gap and test Tuesday's range and the zones shown. If bulls can support the 2057.50-59.25 zone I expect the weakness to be short lived.
I'd prefer to see commitment from one side above or below the overnight extremes or the market may continue to churn inside yesterday's range. Zones I'm using for today are below:
Zones - Wednesday
Apologies for a shortened report this morning - yesterday's attempted move away from short term balance has continued overnight and stalled near the top of the current two week range. I'm looking for the 57.50-59.25 zone to hold for continuation higher towards 80.00-82.00 zone. Below 57.50 could see weak longs shaken out and an attempt to push down to the 43.50-45.00 zone. I'm watching overnight support at 63.00-64.75 key for short term direction off the open.
Review & Plan - Tuesday
The market continues to trade in a fairly tight range, around the current range VPOC and composite HVN at 2040.50. This is a pivotal area and the longer this balance continues, the greater the energy of a move out of balance when it comes. I've used arrows below for anticipated directional moves and reaction areas around this HVN.
The market could still pull back to the 2020, even 2012 area and keep the longer timeframe value move continue higher. We do also have a classic flag emerging on the 60 min chart below which is a continuation pattern usually. However, until we see a break of the channel either way, it doesn't help.
Zones I'm using for today are below:
Review & Plan - Monday
The above chart shows the progression of value over the past couple of months. A range forms, eventually breaks with an imbalanced moved, then retests the top of value of the previous range. The current short term range is building energy for a large break in my view. The current VPOC of this range is 2040.50 versus 2061.50 on the composite volume profile for the past 1500 days.
Overnight has been strong with Europe, led by the bank sector. The split profiles below show the sessions activity overnight:
My zones for today are below. My primary expectation is for a test lower after the open but for buyers to maintain control above the 2040.50 range VPOC and ideally the 43.50-45.50 zone. I'm looking for an initial upside objective of the 58.75-60.25 zone. If buyers fail to hold above 40.50 then we could rotate down to the overnight low zone and potentially lower.
Review & Plan - Thursday
The FOMC minutes were the catalyst for the break from the balance area created in the day prior. The early morning tested the 34-36 support zone and failed to bring in aggressive sellers. Once back above the prior day's open and VPOC, overnight shorts were squeezed, as can be seen with the single prints highlighted above.
The POC/VPOC build above the overnight high and the rally fell just a point short of the composite VPOC at 2061.50, leaving a poor high on the market profile.
The daily chart below shows where the ES is in relation to current value of the range from 1957.25-2071.50.
Plan for Thursday:
Overnight saw a very brief move higher to 2062.00 and has been weak ever since, tracking USDJPY all morning. The zones for today are below and highlight the swing bull/bear zone at 34-36, which if tested again has a high chance of breaking this time and could see long liquidation. The bull/bear zone for today is at 56.25-57.50, from the overnight break lower during the European session.
I would expect the 41-42 zone to see strong responsive buying on first test, which is where yesterday morning broke out from. Below there, shorts could really press the downside to break the 34-6 zone. Above, 53.50-55 is initial resistance, closely followed by the 56.25-57.50 day bull/bear. Once above there, longs are likley to press and squeeze shorts out into the higher zones.