Review & Plan - Thursday
Review
The strong rally overnight yesterday left a large gap on the open, and the day session low at 2042.25 was a tick above the most traded price of the past 5 years at 2042.00. With support above that level buying stayed strong all day and targeted the swing high from last Friday at 2064.75. Bonds sold off heavily in the afternoon .
Overnight
The range currently is 2056.50-73.75 after initially spiking higher on the open following release of the bank stress tests. Jobless claims came out in line with expectations.
The 60 min chart below with weekly and composite profiles shows the move back through the composite high volume area, now finding resistance at lows from last week. Last week's VPOC was at 2077.75.
2062.00 is a high volume node on this week's profile which could be key support for today.
Plan
Using 2062.00 as a bull/bear pivot today - acceptance below puts risk of move back to 42 and possible gap fill down to 29. Support at 62 keeps short term bulls in the driving seat with an open gap above to Thursday's low at 2089 potential expected high range extreme. End of quarter trading day so institutional flows likely to continue.
Zones for today:
Review & Plan - Tuesday
Review
A quick look over the monthly, weekly and daily charts first.
On the monthly profiles we can see the ES is trading back inside the value area from March, which was when the market broke out to the upside following the strong sell-off at the beginning of the year. Until the market begins to accept prices back inside last month's range, I would expect more longer time frame selling.
We can see on the weekly chart below that the market is currently under the low volume area at the bottom of the major volume distribution on the right hand 5 year composite profile - this I would expect to be defended by sellers.
The daily chart has the yearly VWAP and standard deviation bands below. Yesterday's low came a point short of hitting it and left a poor low on the market profile.
Overnight
A strong rally in Europe has lifted the ES and the range is currently 1982.25-2011.75, on much lighter volume than the past two days.
Plan
The market has got long overnight and has attempted to push into the gap above yesterday's open. The gap area maybe filled but longer time frame selling is still expected to step in on rallies in my view.
The 2011-13 resistance zone is an important area short term and the 1999 level is key for bulls to hold above.
Review & Plan - Thursday
Review
The market held within the recent balance and tested near the upper extremes (leaving a poor high)and settled at 76.75 back near the range VPOC (77.75).
The daily chart below shows the vwap on the year so far with standard deviation bands. The 2nd upper SD is at 2155.25 which would be the initial target if we get a remain vote and the VWAP is at 1978.50 which would be the downside target if we get a leave vote.
The odds with betting exchanges are heavily skewed towards remain, with an implied probability of 86% currently.
Overnight
A poll released during the Globex close was weighted towards remain which saw cable (GBPUSD) gap a full point higher and continue to new highs on the year.
ES reopened on a gap higher at 2083, which will be a bull/bear level for today.
Plan
Voting doesn't finish until 4pm cst and results won't be until Friday 1am cst. Current acceptance above recent balance leans towards higher prices and initially the naked naked VPOCs above. Until there is acceptance below 83, I would expect rotation around the upper zones.
Review & Plan - Wednesday
Review
Market continued to accept above the gap and consolidated inside the prior day filling in the low volume areas.
Overnight
The range is currently 2077.00-85.00, consolidating inside value of the current range this week.
Plan
The market continues to balance in a tight range rotating around value. Yellen is speaking again today at 9am cst, followed by EIA Petroleum Status Report at 9.30am.
Until we see acceptance below the 68-71.50 support or above the 86-89.75 resistance, expectation is for continued rotation around value. The longer this continues the greater the energy of a breakout.
Review & Plan - Tuesday
Review
There was a large gap higher on yesterday's day session and a push through the prior week's high which saw buying fade at higher prices and selling pushed back into the prior week's range. Sellers dominated after the morning high and the target became the open gap into the close.
Overnight
The market remains jittery to any Brexit polls. The overnight range so far is 2074.25-86.00 versus settlement at 74.25. Germany released a stronger than expected ZEW survey which has lifted European stocks.
Plan
High risk event: Janet Yellen is speaking at 9am cst for her semi-annual testimony to the Senate banking committee.
The mid-morning pullback high from yesterday at 87 is a key level for bulls to hold above for today, and of course the VPOC at 88.25. Failure to do that would favour a closing of the range and settlement gap from Friday. Given the Brexit vote on Thursday/Friday morning, I think the odds are less likely that buying volume is strong enough to continue through yesterday's high just yet, but if it does we are likely to see a short covering squeeze.
Revised zones for today:
Review & Plan - Monday
Review
Friday's quad witching saw a contracted range inside Thursday and above Thursday's open. The prior day's profile anomalies were repaired and settlement was at 2059.00. Underlying share volume was high on NYSE at 5bn with the June share option expiry.
The day session range stayed mainly within the short term bull/bear zone and initial support.
Overnight
The weekly volume profiles below show the gap open today with last week's high at 2089.25 next key resistance followed by the composite low volume area at 2094-96, which also coincides with the value area low from the week beginning June 5th.
The range is currently 2070.25-87.50, with the trend rising steadily from the low at last night's open.
The change in short term sentiment to 'risk on' has been driven by Brexit polls now showing more balanced voting from a previous leave gain, and German PPI exceeded expectations.
Plan
The overnight move and likely large gap to Friday on the open is likely to leave shorts stuck and the strong possibility of a P shaped profile today. 2079.50-81.50 is the bull/bear zone for today, though I would expect responsive buying at the first three support zones below. Above last week's high we may see an acceleration of the upside into the 96 area.
Review & Plan - Friday
Review
Yesterday was a good example of the auction process playing out. Sellers had been dominant and bias bearish going into the day with the downside target at 2042, which is the most traded price in volume for the past 5 years (back adjusted). Buyers took over control and pushed back inside the gap, found support inside of Tuesday's range and eventually back up to the prior day's open and the current week's VPOC (see weekly profile).
Day session Market & Volume Profiles
Weekly Profile - Full session
Overnight
Extended higher to test Wednesday's VAH and found support at bottom of yesterday's short term bull/bear.
Current range: 2064.50-74.75
Plan
Quadruple witching today so be aware of increased volatility at the open and close.
I would look for a potential range between 2055-80 as my primary expectation, with bulls back in the driving seat - consolidating some of yesterday's range down to the mid morning pullback support and pushing up to test the FOMC high.
Review & Plan - Thursday
Review
Following the FOMC announcement, a quick look at the longer time charts is necessary. Firstly the weekly profiles and then the daily chart with the yearly VWAP(purple) and standard deviation bands. Both have a 1500 day composite volume profile on the right.
We are moving back towards the composite VPOC at 2042, which was the break out area from May 24th.
Risk off sentiment and plummeting bond yields driven mainly by central bank policy and Brexit concerns are likely to continue for now. A 'remain' vote next week in the UK is likely to see a huge unwinding of shorts and sharp rally back up towards the highs in my view, but for now, short term bias remains bearish.
Overnight
Continuation lower with current range 2051.75-65.00, taking out Tuesday's low. Settlement was 2063.50.
Plan
I'm using 2064.50-66.00 as the short term bull/bear today, following the spike lower and volume into the close. Overhead resistance is likely to see responsive sellers. Until market holds above 2079.50-81.50, I see sellers in control (this is now the longer time frame bull/bear zone)
Bias remains bearish and will be looking for shorts at resistance zones/dynamic intraday levels. Initial downside target remains 2042.
Zones for today below on the day session profiles and full session 30 min bars.
Review & Plan - Wednesday
Review
Overnight
Rallied higher with Asia and Europe, range currently 2059.75-73.25.
Plan
As per yesterday, holding above or below the slightly adjusted bull/bear zone will be key to my short term bias. (2071.50-73.25)
FOMC later - expecting increased volatility and keeping a close eye on bonds and the dollar. Rate rise is not expected and would be a major surprise to market. Yellen's speech and guidance key for directional bias post announcement.
The market has got very short going into the meeting,which potentially leaves a lot of buying to cover should we get a dovish statement.
On the downside, there's a poor low from yesterday and the composite VPOC at 2042 as main target below there. Above, the bull/bear, the market could easily rally back towards 2100 if there's a short covering scramble post announcement.