Tuesday Prep
Review
The gap lower on the RTH open saw a continuation drive towards the recent range HVN as discussed yesterday. Rejection of higher prices has been clear for the past two sessions with the selling tails in the first half hour period. Volume picked up with over 1.8m contracts trading with the liquidation break.
There was negative momentum from the outset and we didn't see any response at the initial support zone. Once the 64.50 HVN had been tested there was a shift in momentum not long after and the support was found leading to a squeeze on shorts into the close.
The daily 24hr chart below shows the HVN test and as long as the market can remain above there, I would expect a recovery and closing of the open gap above. However, should the market trade through yesterday's low and take out last week's low, there is an area of weak structure from around 2241-2208.
Plan
Overnight has ranged between 2268.00-76.75 versus settlement at 2276.00. I have initial support at 66.25-69.00 and would want to see that zone hold to initiate longs or I think we may not have seen the end of the short term downside. A break above initial resistance at 74.50-77.00 puts pressure on shorts and there's potential for a squeeze rally into the zones above depending on volume/momentum etc. Broken support becomes resistance and vice versa. With the FOMC meeting starting today and not announcing until tomorrow there may be a lack of continued directional moves if there is a break either way.
Zones for today are below on the 30 min and renko charts.
Monday Prep
Review
Very low volume on Friday and balancing below the prior day's value following the early rejection higher which left a long selling tail.
Plan
Over the weekend sentiment has definitely turned more bearish and we've seen the overnight range drop to 2279.25-85.75 versus 2289.00 settlement but still on low volume. We may see an attempt to push the market back towards the 2264.50 HVN though the 74.25-77.50 zone is potentially where buyers could defend. If that fails the I would expect a push into the 64.50-67.50 zone. 59.50-62.00 is an important support zone to hold or we could see much heavier liquidation if that fails.
The long term trend remains bullish but short term neutral/bearish and a push back through initial resistance at 82.50-84.50 could close the expected gap when it opens. However until there's acceptance above the 90.25-91.25 zone I would expect sellers to step in on rallies.
The updated zones for today are below:
Friday Prep
Review
Slow balancing at higher prices yesterday saw a high concentration of trade between 92-94. After the early move above the prior day high (leaving a poor high at 96.50), there was an attempted break lower which failed with a lack of broad market weakness. Volume was light at 1.15m contracts.
Plan
Overnight has ranged between 2291-96.75 versus settlement at 94.00 on very light volume.
The gap and weak structure below remain untested and assuming today manages to hold the 91.75-93 zone, I would expect to see fresh highs through 2300. If that initial support zone breaks with broad market weakness then we could see weak longs liquidate and potentially see a push into the gap, though we could see responsive buyers step in at the 86.50-87.50 zone, depending on volume etc.
Remember, not trading is a position in itself as it may be worth waiting for the market to show its hand instead of trying to force a trade for the sake of it. All time highs can be tricky to trade, especially when the volume is so light.
Thursday Prep
Review
The gap higher and continuation to new highs was yesterday's main expectation, though volume was only 1.3m contracts. The move up is leaving weak structure below which will run through quickly when we do see a correction. However, the bias remains to the upside until proved otherwise.
The market internals were not excessively bullish as you can see below. There was an reaction off the second resistance zone and a pullback to vwap before continuing to new highs before the close. There has been a strong sell-off in bonds over the past few days with the move higher in stocks, more in keeping with asset allocation switching out of bonds into stocks.
Plan
Overnight has pushed to new highs with a range of 2291.75-99.50. I'm using a short term bull/bear zone at 94.50-95.75 as I think if the market fails to break through that we may see some short term liquidation into the zones below. This doesn't alter the medium and long term bullish bias. Holding above 95.75 should lead to continuation through the 2300 level. There is no hard resistance above clearly and I'm not looking to fade a run up until we see a change in short term trend.
Wednesday Prep
Review
We finally got a directional move yesterday, once the market had pushed and held above the initial resistance zone at 67-68. The resistance zones were targets and not areas to fade once the break was on, as stated in yesterday's prep if there was a break above IR. Most strength was in the materials sector following comments from Trump.
The move higher was on fairly low futures volume of 1.2m contracts, and the action was forced with shorts squeezed and weak structure left in the day's profile. This would be expected to be filled in though the trend higher is in play for now.
Plan
Overnight has ranged between 74.75-82.25, holding an area of support from yesterday's rally. If 74.25 breaks I would expect small liquidation but for responsive buyers to step in at the zones below (depending on news/volume etc.).
The bias is clearly bullish and continuation is the main expectation. The two resistance zones marked below are targets short term based on fib extended retracement levels and not necessarily areas to fade. Shorts could continue to be forced to cover and we could see similar type action to yesterday. Alternatively, we may see some consolidation at these higher prices before continuation or a brief break lower to find new buyers. We would need to see a break below the 59.50-62.00 zone to change the short term bias to bearish.
Tuesday Prep
Review
A failed break through initial resistance left a selling tail between 64.50-67.50. The 67.50 level was highlighted last week as being an LVN of the current multi week range, and important to find support at if there's a break through to the upside. The upside failure saw a sell-off to take out last week's low but there was no follow through and buyers pushed prices back above the middle of the day's range but below the range VPOC at 64.50.
Market internals were not majorly bearish on the move lower and became more positive once the bottom of the 52.25-54.25 zone had been tested (see below).
Plan
The overnight range has been narrow so far at 2259.50-64.25 on light volume versus settlement at 62.00.
We're still seeing two-sided trade and I think that until the 67-68 resistance or 50-52.25 support is broken with volume and momentum, helped by the Nasdaq and Russell in alignment, we may continue as it has been.
If the initial resistance is broken and becomes support, I would use the upper zones as targets and be cautious of fading unless there are clear divergences in market internals. There are still several weak highs, including the all time high.
On the downside, if 50 breaks I'm expecting a push through the 48.50 swing low into 42.50-44.50 which was a support area from Jan 3rd. If that zone fails to hold we could see a flush through to the 34.50-37.50 zone, depending on volume/momentum etc.
Monday Prep
Review
Friday failed to see a breakout from balance, which was my main expectation. The underlying internals were not supporting the rally and the market had a liquidation break lower, followed by balance below the overnight high, before settlement at 2266, just above the current range VPOC at 64.50.
Plan
The chart below shows the range the market has been stuck in for the past 6 weeks and the value area created between 2254.00-69.25, around the 64.50 VPOC.
Until we see some acceptance outside of value along with strong momentum and volume, we are likely to continue seeing two sided trade. It's a fairly light economic calendar this week sp all eyes will be on any policy developments from the new administration.
Updated zones for today are below:
Friday Prep
Review
The market opened a tick above the prior day's high and the attempt to push through and hold above initial resistance failed. The market internals were weak from the off which gave a heads up to be cautious of longs with a failed breakout and look for a potential reversal. The 52.25-54.25 zone held (breakout area from Jan 12th & range VAL) and there was a move back to vwap into the close.
Plan
Overnight has ranged between 2260.75-68.00 versus settlement at 2261.50. Notes and bonds have been weak again with the 10 and 30 yr yields hitting 2.51% and 3.08% respectively. With the inauguration today we are very likely to see a break from balance and a wide ranging day. The zones are still the same and the weak highs are vulnerable, which includes the all time high. A sustained breakout either way is going to need heavy volume and momentum along with underlying market breadth, or it could fail and move back into balance.
Today's zones below on 30 min and renko charts:
Thursday Prep
Review
The opening drive lower and bounce off support was about the extent of any excitement in yesterday's RTH session. An inside day with a strong buying response off the low (also the value area low of the year so far).
The 2 min chart below shows the reactions between the zones and a weak/neutral TICK and A/D, which didn't support a move higher.
Plan
Overnight has ranged between 2261.50-2268.25 on light volume versus settlement at 2266.50.
The zones are exactly the same as yesterday with a short term bias neutral/bullish. The strong buying tail from yesterday showed a lack of selling pressure and once again the dip got bought. We should get movement outside of the range once the inauguration is out of the way and odds favour an upside break to take out the poor highs that have been left over the past couple of weeks. However, anything can happen obviously and if the market breaks and holds below the 58.25-57.25 zone I'm cautious of longs and the zones below are targets. We could still see responsive buying but this will need to be watched in real time along with monitoring market internals etc.
As said yesterday, a break above the 67.25-68.75 zone and pullback to there could offer decent support for a continuation rally.
Zones below on 30 min and renko charts:
Wednesday Prep
Review
The above chart shows the combined market profiles (time) and volume profiles for the year so far (full Globex session). The balance continues around the 2265.00 VPOC with the value area between 2258.25-2270.50. There's a step in the volume profile at 2267.50, so if there is a break higher through that we may see support there on retest.
Yesterday's RTH session traded between the initial support and resistance zones. The underlying market was weak in momentum terms, as shown by the TICK. There are weak highs to retest at 2274 and 2277, with no selling tail shown at the all time high yet.
Plan
Overnight so far has ranged between 2261.25-68.50. CPI and Industrial Production are due at 07:30 ct. Crude is about 1.5% weaker and the dollar has bounced following its recent selloff.
The bias remains neutral short term and bullish long term. A break and hold above initial resistance with decent volume and momentum puts the all time high at risk. Another test of the 57.25-58.25 support would be the third attempt to break through so will be watching internals closely. Meanwhile, if overnight support at 61-62 holds on test and buyers push back above the 64-65 bull/bear zone, this would signal strength and potential continuation higher.