Friday Prep
Overnight so far we've seen responsive buying off of initial support and a rally into initial resistance, which has now broken. This 73.50-74.75 zone I'm now using as a short term bull/bear zone, or in this case more of a bull/neutral zone as above there has potential for new all time highs but below could just rotate back into the choppy range of the past few days.
Acceptance below 68.50 with volume and momo etc could bring in sellers down to the 60.75-61.50 or even 57.00-58.75 zones. Failure at 57.00 is likely to bring in heavy selling, depending on how it gets there.
Thursday Review
Yesterday was a very slow, balanced day spent trading between the double distribution HVNs from the prior day. Settlement was at 2471.25 with volume at 1m and just a 7 point RTH range.
The last half hour saw a sharp liquidation break to new lows, followed by a rally to the high after news that Justice Department Special Counsel Robert Mueller has issued grand jury subpoenas related to Donald Trump Jr.'s 2016 meeting with a Russian lawyer at Trump Tower.
The balance area from the past week shows the lack of conviction currently in the market and has appeared to have been dominated by short term traders.
A poor high has been left on yesterday's profile, plus as mentioned in yesterday's note, we are likely to see a big short squeeze above the IR zone as long as there is enough strength behind it. Yesterday's late dip below IS zone was quickly reversed leaving a buying tail.
Overnight the existing zones remain in play and we've once again seen responsive buying off the IS zone straight up into the IR zone. The employment report in a few hours could be the catalyst to break out of balance either way if there are any major surprises to expectations.
Thursday Prep
Overnight has so far stayed within the IR & IS zones written in the review and has ranged between 2467.75-73.75. The VPOC for August is currently at 2472.75. Market state is neutral/bullish (above 67.25-68.50 IS)
If the 67.25-68.50 zone can hold this is a sign that buyers can dominate today's session. Failure to hold that zone puts pressure on short term longs and my next target below is the 60.75-61.50 zone.
A break above the 73.50-74.75 IR zone could see a push higher triggering buy stops if we see enough momentum and broad market strength. The resistance zones above IR are likely to see a reaction but the strength of the move into them will need to be gauged in real time.
Wednesday Review
Yesterday opened at 2474.75 and attempted higher briefly, with a bearish advance/decline from the off. The Initial resistance zone at 75.50-76.00 held and we got a liquidation break lower.
The first hour range (initial balance) was broken to the downside and for the second time this week it turned at the 127.2% fib extension of that range (see below chart). This to me signals that there was a lack of long term money selling and trade was dominated by day traders. We did also see some bullish divergence in the TICK at the lows which then led to a move back to vwap and then a push back up to the open by the close.
A double distribution was left on the day, split between the 70.25 LVN.
There was heavy seller absorption into the 73.50-74.75 range so I am using that as IR for Thursday. IS at 67.25-68.50 being yesterday's and the composite HVN, and where the afternoon break higher started from.
If IS breaks then there's a good chance it continues lower into the 60.75-61.50 zone, but will have to see in real time.
Overnight range below so far moved between the two HVNs from yesterday and IR-IS
Wednesday Prep
We can see from the hourly chart above with monthly & cumulative volume profiles that the market remains in a fairly narrow range near the all time highs, currently holding above last month's VPOC at 2468.50.
Tempo has been sluggish over the past few days but we may see that pick up today following AAPL earnings after hours. We've not seen a 'good' high put in yet by the ES where we see a long selling tail on the daily profile. For this we need to see a fast spike up aggressively sold down leaving excess at the highs leaving multiple single prints ideally.
On yesterday's market profile, value moved higher though failed to take out the prior day high. There was a 1-tick failure at the initial balance low and then a slow grind higher to settle around the VPOC/VWAP of the day.
Overnight so far the range is very narrow at 2472.25-76.00.
Initial support (IS) @ 71.25-72.75 Initial Resistance (IR) @ 75.50-76.00
If buyers are to dominate then I would expect that zone to hold which could lead to a break through IR and test of the resistance zones ahead of the ATH.
Failure to hold IS puts market state more neutral and potentially more neutral/bearish short term if the 68-68.50 zone fails
Wednesday Prep
Yesterday's daily value balanced below the prior two days but settled just above the daily high from the 1st (2330.75 vs 30.50). The brief look lower from the open stopped at the prior day RTH low which put the overnight high the next range target.
Overnight has been subdued so far, with the range currently 2428.25-33.25. Yesterday's VPOC at 32.50 is the first obstacle for buyers, and failure to do so could lead to a break lower. Down to the 23.50-24.75 zone we could see buyers defend, but a break below 23.50 could see a move through little prior support from last week's breakout down to test the 16.00-17.50 short term bull/bear zone.
Acceptance above 32.50 could then see an extension higher of yesterday's range, with potential for new highs if there's strong enough volume, momentum and market internals.
Tuesday Prep
Yesterday's volume of only 877k contracts and 6 point range was kept low with some of Europe on holiday. The breakout area from June 1st highlighted above is a poorly auctioned area we could see revisited, though initial defence is expected of the 23.50-26.25 zone.
A break of 23.50 with sustained volume and momentum would then target the 17.50 breakout point and IBH from June 1st. As long as the 23.50-26.25 zone holds, we have a poor high from yesterday and a lack of excess at the all time high to carry forward. There will need to be a significant pick up in volume, momentum and breadth to take out the highs.
If the overnight low is rejected after the open then we may see an attempt to close the range gap that is likely. The overnight range is 2426.25-35.25, with the trend lower along with a weak Dax during the European morning.
Thursday Prep
Once again, higher value with lower volume, this time not even breaking the 1m contract mark. A painfully slow session for the most part with small movement post-FOMC minutes to test the 94.50-96.50 zone before a move into the close just short of the ATH.
After hours the move through 2404.50 was the game to run through stops, and so far the breakout has held. The current range is 2402.50-12.50 versus settlement at 2402.00, being unaffected by the near $2 dump in crude after touching $52 and the plethora of OPEC headlines. The thin volumes ahead of the long weekend leave the market vulnerable to sharp moves, though for now there appears to be a resilient bid underneath it. We have no upside prior resistance and again in the absence of any serious selling and underlying momentum this may just continue to drift higher, though I'd expect at least a re-test of yesterday's settlement price. If the market fails to hold above yesterday's range then we could see some rotation lower (at last!). The weekly VPOC sits at 2398.25 which I'd look to be an initial magnet on a rotation lower, which was also marked the breakout point from yesterday.
Zones of interest for today:
Wednesday Prep
Another move higher in daily value and another drop in volume. The market opened above the prior day's range and attempted to close the gap early on. The low at the prior VPOC had little momentum or volume behind it, and buyers began a slow march towards 2400. The NYSE A/D trended higher from the lows and the TICK remained positive for the rest of the session.
Overnight has been quiet so far, balancing between 2394.75-99.25 on low volume. FOMC minutes from the previous meeting are released at 1pm CT.
The drift higher towards the ATH can easily continue with no real selling stepping in. The initial resistance zone I have at 2402.25-03.75, if the overnight resistance at 99.00-00.00 breaks. If there is a clear break of the ATH then the next major Fibonnaci extended retracements of the 2404.50 high to 2344.50 swing low are at 2420.75 (127.2%) and 2441.50 (161.8%).
On the downside, the 94.50-96.50 zone is the first short term support area for longs to defend. Below there, a break of 90.25-92.00 could trigger a liquidation move which, depending on the volume and momentum behind it, would initially target the high volume area towards 84.00.
Today's zones:
Tuesday Prep
The market opened at tick above the overnight high yesterday and managed to hold above the prior day's value area for the whole session. Volume was low at 1.1m and the morning was extremely slow with a lack of underlying stock momentum in the NYSE TICK. There was an attempt lower after making a poor high early on, and this left a 1 tick failure below the initial balance low. The destination then became the open range gap, which it eventually closed, along with a higher moving POC/VPOC.
After hours we had the tragic news of the terrorist attack in Manchester. There was a risk off move initially but this was very brief as markets have become all too used to these situations, sadly.
The full session chart below shows yesterday's zones (with volume profiles splitting the RTH & overnight). The move up into the 96.75-98.50 resistance has been accompanied by a falling cumulative delta. That is a zone I would expect to be strongly defended by sellers. The overnight range is 2386.75-97.75 so far, versus settlement at 92.75. If that zone breaks I'd expect a run through 2400 and would be looking for sellers to step in at the 2402.50-03.75 area.
PMI and New Home sales are due 15 and 30 minutes after the open. With volume falling on this rally the case for shorting is building if we don't see decent strength and momentum on the upside. However, a squeeze higher back up to the ATH is still possible, although my main expectation is for a break before that happens. So far we've seen responsive buying on any break and for a sustained downside move we shall need to see volume stepping in and downside momentum in stocks, across the board.
Zones for today: