Tuesday Prep
Review
Below is the RTH daily chart with monthly volume profiles behind and a 5 year composite profile.
The bullish reversal from last week's sell-off has not yet been tested in RTH, but overnight has seen a test of one of the support areas from the rally.
The daily Globex chart below shows the current range within a range, balancing at higher prices around the 2265.00 HVN. The overnight range is currently 2257.50-67.50 on higher volume than we've recently.
The zones for today are below. The 57.25-58.25 is an important support zone to hold or I think we could see an attempt to test last week's low. Similar with the 66.50-67.50 overnight resistance; If that breaks and holds, then main expectation is for an attempt for the all time high. We may continue to see two-sided action around the 65 HVN, but the range will be expected to break soon with a good amount of energy either way.
On the downside, the 50-51 zone would be the last key support for responsive buying I would expect before we could see long liquidation. The 27.25-29.25 zone would be where longer time frame support would be expected on first test.
Friday Prep
Review
We saw a drive away from the bull/bear zone on the open (i.e. the multi-day range high volume area on this occasion) and weak market internals supporting the move lower breaking the short term balance low area. The break below the IB low failed to bring in much more selling, with a tiny amount of volume traded below 2250 leaving a step in the profile. The over-riding long term bullish bias saw selling momentum dry up and a short squeeze once back above the 54-55 area, eventually leading to a test of the prior day VPOC.
Overnight
The range is tight at 64.25-67.75, holding above the multi day VPOC
Plan
The market has rejected the breakdown of balance and the main expectation is to now test the opposite extreme i.e. the poor highs at 74 and 77. There are very few changes to the zones today
Thursday Prep
Review
We can see from the profile a fairly balanced distribution, considering the moves, and a VPOC above the current range VPOC at 64.50. The market remains within a range and is building energy the longer it stays in it for a trending move, as the more volume that builds is going to put more positions offside once it breaks.
We saw some good movement yesterday, thanks to Trump's press conference. The morning move higher rejected the initial resistance zone. The comments regarding the drug industry by Trump sent the biotech sector into a spin, pushing down into the 54-56 zone where buyers responded. Another test of that zone after the initial bounce saw a rally into the close to just break through initial resistance. The USD sold off sharply and yields dropped (helped by a lack of economic stimulus detail from Trump and a strong 10 yr auction).
Overnight
So far the market has sold off from the closing high and continues to balance around the range high volume area and VPOC at 64.50. The Globex range is currently 2260.75-70.50, inside yesterday's range.
Plan
The current multi day range continues to build volume and potential energy for a trending move once the range breaks. Until then, we have a long term uptrend and a short term neutral bias. We could see responsive action from both sides and I'll be closing watching for signs of increased pressure/volume and momentum as well as broad market participation, or lack of it, into the zones.
Below are the zones for today on the split session market profiles and the shorter term renko charts:
Wednesday Prep
Review
We saw some aggressive reversals yesterday, first with the initial move lower to tag the overnight low, the 15 point rally to tag Friday's nVPOC, followed by a sharp sell-off back into the current multi day range VPOC.
The high is weak from yesterday, as is the all time high. Even if we begin a sell-off from here, the carry forward information is that the odds of those levels being taken out is high, whether today or at some point down the line.
The chart below shows yesterday's zones and the market internals. You can see that the initial move lower did not show broad market participation as the NYSE TICK stayed mainly above zero and the NYSE A/D was climbing. At the 2274.00 high there is a clear negative divergence in the TICK and the A/D had stopped climbing at around 2270.00.
Overnight
The market tried again to push lower but failed to take out the 59.50 level. It has remained within the bottom half of yesterday's range, currently between 2259.75-65.50. European indices have rallied, Bund and Treasury yields fallen along with the EURUSD.
The main event today is Trump's first press conference since being elected at 11:00 ET, which has potential to bring some highly volatile action into the markets.
Plan
The short term bias is neutral as the market continues to rotate around the current range high volume area. The long term bias is bullish still, though the aggressive sell-off yesterday could still have some legs to try to test the bottom of the range. The bull/bear zone is at 63.50-65.50.
If there is a break lower I would be looking for responsive buying at the 42.50-44.50 zone, which was a breakout area from Jan 3rd. If that breaks I would expect a flush through to the Dec 30th nVPOC/settlement in the 34.50-37.50 zone. On the upside, if the 69.25-70.25 zone is taken out and holds, the all time high is the next target.
Zones
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