Thursday Review
Yesterday's failed breakout and brief liquidation stopped in it's tracks at Tuesday's open, 2353.00. The day balanced from then on and left value overlapping higher to the prior two days and settling at 2262.75, +1.75pts and volume of 1.5m
RTH Daily with Monthly Volume Profiles & 1500 day composite
The breakout at the open failed and the liquidation move lower failed to hold the 54.50-55.75 support zone and just touched the zone below. The drop left a lot of single prints early on and without continuation to the downside the odds are good that these are at least attempted to be closed intra-day. We eventually saw a move back up to initial resistance late on and then back to vwap for the cash close.
Wednesday Prep
Having been away for the past couple of weeks I've missed the continued melt up in the stock market. The move has left gaps and weak structural support should there be a correction (note that the VPOC for Feb is currently 60 points away at 2288.00). A major negative news event could have it back down there a lot faster than it rose. However, there's no sign yet of an end to the upside auction and short sellers have added fuel to the move as they are stopped out.
The zones for today are below based on the last two weeks price action and profile structure.
Wednesday Review
The market opened below the prior day's low and failed to hold the initial support zone. This had potential for a move back into last week's balance, but the break down was weak and sellers failed to keep momentum going. The NYSE TICK was also very neutral with the move, not supporting a continuation.
Once back above support there was a slow grind higher, with a pullback to vwap, until touching the top of the initial resistance zone near the close.
We could see continuation higher above IR overnight to squeeze shorts though without any momentum the VPOC of the past few days is at 2288.00 which may be a short term magnet. 85.25-86.25 is now initial support for the globex session.
Wednesday Prep
Review
Another low volume day saw an early attempt to push into the initial resistance zone, but a lack of market breadth led to the overnight long positions bailing out and breaking down to first test the overnight mid at 89, bounce to the VWAP, and then push to test the bottom of the initial support zone. Again, a lack of volume on the downside failed to lead to a larger liquidation and the market settled around the prior VPOC.
Plan
Overnight so far the range is 2284.25-91.25, overlapping lower to yesterday's RTH range (though prior overnight low at 84.00).
As with yesterday, if the market accepts below 85.25 there's a risk of further liquidation back into the prior balance from last week with the weak structure between 79-84. I'll be looking for responsive buying at the 76.75-78.75 zone on a break lower, though if that fails we could see rotation lower into 70-71.25 and possibly the 64.50 CHVN.
On the upside, 91-92 is initial resistance and we need to see more volume and momentum than we've seen recently behind a rally to sustain the move.
Updated zones below shown on the renko and 30 min Globex charts:
Tuesday Prep
Review
A slow, low volume start to the week was inside Friday's initial balance. The 87-89 zone didn't hold though we didn't see a liquidation break down into the 78 area which I was looking for. Instead, the poor low that was left at 83.50 was a sign that sellers didn't have enough weight behind them and now shorts continue to get trapped, as we've seen overnight.
The overnight range is currently 2284.00-94.00 on light volume. The overnight vpoc has built above yesterday's range and we could either see some inventory adjustment after the open or continuation higher to put the squeeze on shorts again.
Plan
The initial support zone for today is at 85.25-87.50 and initial resistance zone at 94.00-96.75. The overnight mid at 89.00 which coincides with yesterday's VAH may also be a level we see a response by buyers. Volume, momentum and strong market breadth are needed to push through the IR and challenge the all time high. If initial support breaks I'm more cautious on longs until either down to the 76.75-78.75 support or back above 87.50.
Adjusted zones for today below:
Monday Prep
Review
Friday saw a short squeeze away from the balance of the rest of the week, leaving a P shaped profile and a poor high.
Plan
Overnight has held higher prices and the current range is 2287.50-94.25. For the bullish short term bias to remain I would expect the 87-89 zone to hold or there's a risk of some short term liquidation into the 76.75-78.75 zone where I'd expect buyers to step in. The resistance zones above are more short term targets and will be cautious shorting up there until there's more evidence of a change in trend.
Adjusted zones for today below:
Friday Plan
Overnight
Ahead of the employment numbers, the market has tested lower and found buyers which broke yesterday's high. The current range is 2270.50-80.50 on light volume.
Plan
If we see a very strong number there could be some fireworks as the dollar will likely rally hard after its recent selloff. There has already been some short covering by the look of it overnight. The zones for today are below and the long term bias remains bullish and short term is more neutral/bullish. I'd want to see the 70-71.25 bull/bear zone to keep more bias to long setups, though if that breaks 62.25-64.50 is the high volume area which could still see a strong response, though caution's needed as there's potential for a decent liquidation break if that fails. Above, the resistance areas are all potential areas sellers could step in so strong volume and momentum is needed to push through.
Thursday Review
The open saw a break through yesterday's low and move down to Tuesday's POC, then reversed leaving a strong buying tail in the first half hour. A rally through initial resistance failed to bring in more buying and the rest of the session was spent rotating between the bull/bear and initial resistance zones.
The VPOC shifted higher into the close and this also moved the VPOC of the week up to 75.75 from 72.50.
The employment situation report is due at 07:30 ct tomorrow.
Thursday Prep
Review
After the overnight rally yesterday, we saw the expected squeeze up into initial resistance and buying dried up and overnight longs liquidated leading to a break lower to eventually test the break out zone from the day before at 68-69.50. Momentum and the broader market were weak as the first two support zones were hit and stabilized once support was found above 68.
Plan
Overnight has traded through yesterday's low and the current range is 2264.50 (multi week vpoc) to 2275.50, versus settlement at 74.50.
I'm using 68-70 as a short term bull/bear zone as I would expect an attempt to break lower should that zone fail in RTH.
The 30 min chart below shows a custom profile since the break lower on Sunday evening. 73.00 is this week's vpoc so it could be choppy around there. A break above initial resistance at 76.25-78 with decent volume and momentum should lead to a challenge of yesterday's high and potentially beyond. I'm looking to be cautious of longs if the bull/bear breaks and wait to see responsive buying at zones below.
Wednesday Prep
Review
Most of the session was spent below the overnight low and building value below the prior day's VPOC. The failed breakdown attempt was evident with the broader market improving (see bullish divergence in A/D below) Trump gave a boost to the healthcare sector which sparked the reversal, squeezing shorts. The close settled at 2274.50, well above the 67.00 VPOC of the day.
Plan
Overnight the range has so far been 2274.75-82.00, above the 2274.50 settlement. The short squeeze could continue with the gap and single prints above.
Overnight support at 78.25-79.75 holding after the open would be bullish and I would expect a rally to the the gap above and initial resistance at 83.50-85.75. The 90.25-91.25 resistance zone could bring sellers back in, though if that breaks I would expect new highs again. If overnight support fails then I would expect the next two support zones to see buyers step in. If 68 breaks then this has reversed yesterday afternoon's breakout and caution needs to be taken on longs.
FOMC later this afternoon so we may see the market in the doldrums until then after an initial short squeeze possibly.
Today's adjusted zones below: