Review & Plan - Tuesday
Review
New all time highs in the underlying cash market were made yesterday and the rally is showing little sign of abating yet with a global chase for yield and central banks supporting prices. Overall volume and the range was lower than it had been as the market moved into new territory.
When we do eventually see a break lower, there are multiple areas to repair in the profiles below as the market trended up forcing shorts out.
The daily chart below shows some upside target levels based on the extremes Pre and Post Brexit. Also, the 2nd standard deviation from the yearly VWAP is currently around 2164. If the rally is to continue we need to watch momentum and volume carefully.
Overnight
The overnight low tested the pullback low from yesterday and quickly found buyers, and continued higher with the European markets to fresh highs. The range is currently 2128.50-2141.75, with the majority of volume at the 39.50-41.00 area.
Plan
Retaining a bullish bias with the market holding above yesterday's VPOC at 2133.75. Below there we may see some liquidation from short term traders but will be watching for buyers to step in at the support areas down to the 2117.75-2119.75 bull/bear zone (pre-Brexit globex all time high area). Below there we may see a test of the 2104.75 pre-Brexit day session high.
On the upside there is no prior resistance, just measured moves/fib levels etc. as potential targets.
Fed members, Tarullo and Bullard, are due to speak at 08.15 and 08.35 cst
Zones for today:
Review & Plan - Monday
Review
Friday's trend day pushed the futures to new highs in the day session, leaving the market imbalanced to the upside. Volume was a fairly healthy 1.9m contracts.
The daily chart below shows how the market bounced off of the yearly VWAP after Brexit and is currently heading back towards the 2nd standard deviation band at 2162.25
The weekly volume profiles below show how the market has accepted above the area of high volume on the composite profile and has found support on pullbacks into it so far.
Overnight
The market continued higher with a strong rally in Japan and China, aided by more central bank money. The range is currently 2120.00-2133.00 on volume of approx. 240k. There is no major economic data due.
Plan
The trend on all time frames is higher and until there is a notable break and acceptance under recent support, I'll be focusing on a long bias at support areas or dynamic intra-day levels of support.
Review & Plan - Wednesday
Review - Day Session
The market sold off from an overnight high at 2104.75 to open at 2085.25, and continued to break lower down to 2072.50. The session filled in an area of thin volume from 06/30 and left a poor low and a gap above to last Friday's low.
The day session chart below also has the composite profile with the last 5 years back-dated volume. We're currently holding above the high volume area which is a positive for bulls. Inside the yellow box highlighted trade has historically been choppy, with exception to the extreme moves after Brexit. Holding below the 2029 area, which closes one of the gaps, would put sellers back in control to target the poor low made at 1981.50 (which was also at the yearly VWAP).
Overnight
Weakness has dominated despite an early attempt to rally higher after the European open. The banking sector is at 5 year lows in Europe today with record lows from Deutsche Bank and Credit Suisse and risk of default seen in Italy's Banca Monte dei Pashi.
The range is 2066.75-85.75 currently
Zones for Today
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.