Tuesday Prep
Review
Yesterday's narrow range RTH session was inside the prior day and built value below the overnight low and prior breakout point from Friday. The mid morning attempt higher failed to close all the single prints from Friday, and there was clear negative NYSE TICK divergence as the ES hit its high, showing a lack of broad market strength to continue higher. Volume was light at just 1m contracts.
Yields across the Treasury curve dipped in tandem with a sell-off in crude.
Across the other major indices, Nasdaq is the relative outperformer. The Russel has just tested the bottom of its daily balance area low, with the Dow mid-range of its upper balance area.
Overnight
There was an initial move lower down to the top of the 58.50-59.50 zone, followed by a responsive buying move back into yesterday's range.
So far, the Globex range is 2259.50-66.50 on light volume.
Plan
The short term bias is neutral now the market is trading back inside balance. The long term bias remains bullish.
Zones Sheet
Monday Prep
Although the ES made a new all time high on Friday, the broad market participation was not strong. The burst through the overnight high squeezed shorts and left a thin area of trade which may fill in during today's RTH. Despite Friday's lackluster new high, the market continues it's weekly uptrend and bias remains neutral/bullish but with a healthy dose of caution at buying at too aggressive a price. We have not seen a good high put in yet, i.e. a strong selling tail of single prints on the market profile where a fast run up by buyers has been aggressively reversed by sellers just as quickly. The US economic calendar is fairly light until Retail Sales and PPI on Friday.
Overnight the range is currently 2267.75-75.25 versus settlement at 2271.50 on very light volume. Notes and Bonds have rallied pushing the longer end yields lower (10 yr at 2.38% & 30yr at 2.96%).
The zones for today are below.
Friday Prep
A fairly slow day with the majority of trade inside the prior day. The break of 2156 didn't motivate sellers to break down heavily beyond 54 and we saw short covering back up into value and a close near the high (cumulative delta went from -28k at the low to +6k at the close).
The lack of directional conviction can be attributed to the jobs report due at 07:30ct. Bond yields dropped sharply yesterday as the dollar sold off.
The current balance area has the highest volume skewed to the upside, with the range vpoc at 2264.50. The overnight trade range is currently 2261.50-65.25, staying close to that level. Zones remain much the same for today and overall bias remains neutral/bullish until the current range low is rejected. Therefore will be looking for responsive buying action on a break lower, depending on volume and momentum into it.
Thursday Prep
Yesterday opened and held above the 2257.00 HVN and slowly continued to the target in the prep at 2266.75. This was a breakdown area from last month and responsive selling has so far stopped the advance to the all time high.
Overnight has sold off back to the 58.50-59.50 zone. We could see a buying response here or if this doesn't hold then the 55.75-56.25 would be a key zone for buyers to defend or risk a liquidation break and spill lower.
Zones for today below on both the renko and hourly charts:
Wednesday Prep
A slightly belated Happy New Year to all my subscribers; wishing you all a healthy, happy and prosperous 2017. This is the first note I've put out for a few weeks on the ES, so a top-down review is needed before looking at the shorter time frame.
The chart above has the weekly bars overlaying the monthly volume profiles and the composite profile on the right (1500 days back adjusted). We have a monthly bullish trend and weekly neutral/bullish.
The post-election up-trend left a new all-time high in mid-December, and an intermediate term range has been formed over the past month between 2227.75-2273.00 and a VPOC at 2257.00
The year opened with a gap higher which has not yet filled fully. A break and hold below the year end pullback low at 2228.00 would challenge the weekly trend and trap December longs which could lead to a liquidation move lower. Until then the bias is neutral/bullish as we could continue to balance within the range and/or breakout to the upside.
The hourly chart above shows the current intermediate-term range with a custom volume profile. We can see that the market has gravitated back towards the range VPOC since the start of the year.
If the market can hold above 2257.00, then a move up to the value area high of that range would be expected, at 2266.75. This is also an area where the market broke down on Dec 28th and is the next key resistance area to break through ahead of the all-time high.
Overnight has ranged between 2251.00-2258.50 with a bullish bias but on low volume. Zones for today are as follows:
Thursday Prep
A failed breakout higher may have left a temporary high in place if the ES, driven by cash market outflows on the month end close, can hold below prior support at 1998.25-2000.25. However, the bigger picture remains bullish for now and the underlying NYSE internals can help determine the strength/commitment of any directional move in real time. A re-test of the old all-time high at 2185.00 is the next major area to target on the downside and I am looking for a strong buying response there on the first test.
A move back above the micro bull/bear at 2198.25-2200.25 keeps the short term bias as neutral with potentially a strong response by sellers at the initial resistance zone (2205.50-2208.00). Holding above 2208 with strong underlying internals puts the bull back in charge and a challenge of yesterday's overnight high likely.
Initial support is at 2190.50-92.75 and if an initial move lower is defended strongly there then I would expect to balance IS and IR
Wednesday Prep
The test lower after the opening swing high was met with responsive buying yesterday. Once back inside the prior day's range the market one time framed higher on the 30 min until the last hour of the day, after tagging the prior day high. Volume was fairly low at 1.3m contracts.
Failure to hold below initial support yesterday keeps the short term bullish bias intact, and only once there is acceptance below there and rejection on a test from underneath does the case for a corrective move increase.
Overnight support - 2204-06
Initial Support 1998.25-00.25
Tuesday Prep
Yesterday was the first full trading session since last Wednesday and we saw an early failed breakout to the upside and then some two-way action defending the 2200 area. Short term sellers put the pressure on in the afternoon which was in alignment with the underlying NYSE internals.
The long-term trend remains bullish but, unsurprisingly, we are beginning to see sellers step in. This now gives us some resistance areas above where sellers are likely to step in again and potential for a small corrective move to at least retest the breakout from the prior all-time high at 2185.00 (back adjusted). A correction would be healthy for the longer term bull move and there are multiple untested prior daily VPOCs which a move lower could target and look for longer time frame buyers.
Overnight so far the range is 2198.75-2206.00 on light volume. 3rd Qtr GDP is due at 07:30ct and William Dudley is speaking at 08:15 ct
Zones for today:
Monday Prep
Friday saw the market open near the prior day's high and push above the overnight high before quickly rejecting and seeing a 'b' shaped profile form associated with long liquidations. However, the selling was not aggressive enough to change the daily uptrend and a poor low was left probably seeing shorts trapped.
A quiet week is expected with Thanksgiving on Thursday, apart from the FOMC minutes from the last meeting released on Wednesday at 1pm cst, though whether anything new will be seen there is doubtful given the continuous stream of Fed speakers recently.
Zones for today below:
2186.75-87.50 Initial Resistance (Friday's overnight high-RTH High)
2182.75-83.75 Overnight Support
2180.00-82.00 Initial Support (Friday's RTH VAL - VPOC)
2175.50-76.50 (1 tick above Thurs open - Fri overnight low)
Main expectation for today is that if we do see an attempt lower, buyers will step in at the support areas above and we see a continuation higher to test and potentially break initial resistance.
If the 2175.50-76.50 zone breaks then we could see some long liquidation but still with the expectation of responsive buyers stepping in at zones below.
Friday Prep
We got the expected move to the 2185.00 high yesterday, though there was no follow through. Overnight initially sold off and then found support at prior resistance and has pushed up to new highs. Bias is bullish on all time frames and the expectation is for continuation higher if we see underlying market breadth and momentum.
Zones for today below (resistance zones shown are measured targets not hard resistance)