Wednesday Prep
Opening at 2498.50, the market moved into the initial resistance zone with some positive momentum and market breadth, leaving a poor high on the profile.
The break lower was not accompanied by weak internals, and the move into the 91.25-92.75 zone saw buyers step in and move prices back up to IR before a late liquidation break left the VPOC at 94.75 and settlement at 95.50.
Overnight the dollar and bond markets have been in play after Yellen's comments supporting a steady rise in rates. The financials should get a boost on the back of this which is likely to keep a bid under the market in the absence of other market moving headlines. The current overnight range is 2494.25-2501.25.
The resistance zones marked are more reaction points/targets for long entries in the current market state, while the 92.00-93.50 initial support and 85.00-87.75 support zones are areas I'd expect to see a buy response.
Breaking above resistance would then change the zone to support, so will be watching 98.50-99.00 and 2501.00-01.50 zones particularly for that. Bias remains bullish/neutral for today (above 85.00) with potential for new all time highs if we see volume, momentum and market breadth participation.
Tuesday Prep
Value built below the overnight low yesterday after the NK foreign minister headlines saw a liquidation break. Market internals were not overly weak though and the sell-off did not gain any momentum once it moved to the low of the 85.00-87.75 zone where responsive buying stepped in and moved back above the open into the close.
2495.00 represents yesterday's overnight low, the initial balance low and the VAH for the cash session. Holding above this level keeps the short term bias more bullish and acceptance below could be a sign that the market wants to re-test yesterday's VAL or lower. However, we could get a buying response ahead of that at yesterday's mid (92.50), VPOC (92.00) & POC (91.25).
Overnight so far the market has ranged between 92.75-98.25 versus 97.00 settle.
Adjusted zones for today are below
Monday Prep
The current market state continues its seemingly complacent bullish bias and is balancing at higher prices. Volatility remains very low as we approach the end of the 3rd quarter and the all time high is within a stones throw of being challenged again.
Until we see evidence to the contrary, the longer time frame remains bullish and short term is bullish/neutral while it remains in the current balance area.
I'm using 2493.75-95.00 as the initial support zone. If that fails i'd look for a move down into 85.00-87.75 where i'd watch for signs of buyers stepping in. With short term bias bullish/neutral i'd still expect to see a selling response at the resistance zones marked unless a move up is on strong volume, momentum and market breadth.
Zones below shown on the globex and RTH charts:
Friday Prep
The market opened at 47.50 after trending higher overnight from the 35.25 low. This was an area sellers had defended the previous day and buyers failed to break, as seen in the triple TPO top. Momentum wasn't supportive on the break of the overnight high and we got a long liquidation break and failure at the initial support zone. Trade then ranged between the bull/bear and initial resistance zones, with value building below the prior day's.
There's still an open gap in RTH which I'd expect to fill at some point when the bull/bear zone fails. For now it has held and 58.00-60.50 is the next key zone to test above, which includes the breakdown area and open from last Thursday. For that rally we'd need to see a rejection of yesterday's value after the open or else there's potential for a rotation lower if it can't hold above prior value.
Overnight so far the range is 2437.50-45.50 versus settlement at 40.75.
The weekly volume profile with today's zones below shows value built above the bull/bear zone, which keeps the bias neutral/bullish, as it is still within a larger range. If we do see broad market strength, size and momentum on a rally then I would see the 63.25-64.25 zone as a potential upside target extreme today, though still looking for sellers response at the zones below there.
On the downside, acceptance below 35 means a possible shift in sentiment and we could see a heavy liquidation break depending on market state.
Thursday Prep
Opening at the overnight low, there was a brief look below and rejection. We then got slow and low confidence moves higher, churning back and forward until hitting a wall of passive sellers into the 46.50-47.75 area which halted the advance. The NYSE advance/decline had trended higher from -1000 up to nearly +600, which was a supportive factor in continuation higher but order flow was clearly not supportive in the ES futures.
The triple TPO poor high on the profile above will be a spot buyers are likely to attempt to break going forward.
Volume was low at 1.2m contracts and settlement was at 2441.50, down 11.25
Overnight so far we've seen a move lower back down to test the bull/bear zone, which found buyers. Bias remains neutral/bullish above that zone but still expecting sellers to be active at the resistance zones on first test. Will be closely watching order flow and underlying market internals for better clues in real time.
Today's zones:
Wednesday Prep
Yesterday's overnight range had balanced between the prior day VPOC and the bull/bear zone. After the bell we saw an opening drive straight through this zone, leaving a 28 tick buying tail on the profile which is indicative of forcing action i.e. short squeeze. I would expect to see this area re-tested in the next day or so, possibly down to the overnight high at 37.25.
Volume was fairly light at 1.3m and the underlying market internals were not as strong as the price action suggested. As shorts were squeezed out pushing prices higher this didn't translate to particularly strong buying in the cash market, considering it was a trend day.
The market settled at 2452.75, +24.75 points. The squeeze may continue but it has left poorly auctioned areas and air pockets in it's wake.
Overnight so far the market has pulled back after a quick look above and fail of yesterday's high. The current range is 2445.25-54.75. My main expectation of today is that we balance inside yesterday's range., filling in the anomalies from yesterday's profile. We could see a return of the uptrend and break higher to test the 58.00-60.50 resistance zone if a test lower can't hold below yesterday's RTH mid (43.50).
Zones I'm using for today are below.
Initial Support 42.75-43.50 & Initial Resistance 50.00-51.50
Tuesday Prep
We saw a reaction at initial support after the open and briefly tested higher to a tick below the prior open, then an aggressive push lower through the prior poor low, down to the composite low volume area (CLVA).
That area should have been used as front of the next support zone which was a bad miss on the prep. However, once back inside the IS zone it ranged between the IR and IS then back to IR into the close. I noticed large size trading into the 24 area around lunchtime, so an area to watch if we revisit. Overall volume was much lower though at 1.3m compared with over 2m on the prior two days.
Overnight so far the range is 2427.75-37.25 versus settlement at 28.00 (trading between the prior IR zone and the bull/bear zone).
Today's zones below are shown with a merged market & volume profile of trade following the sell-off. If the market fails to hold above 35-37 then I would expect rotation lower.
27.50-29.75 is the more aggressive area of initial support, then would look for the 23.50-25.25 zone to hold on first test if buyers are to stand a chance of regaining dominance. Below there we could see selling accelerate to try and re-test yesterday's low though will be looking for a buyers response at 17.75-18.50 if we get there.
Above the bull/bear I'd expect initial reaction at the 39.50-40.75 zone, and above there the anomalies from last week would be repaired at the next two zones.
Overnight & RTH split sessions
Monday Prep
Friday opened below the prior day low though the underlying market internals were not overly weak. Once the first hour range had been broken we saw a balance breakout, trapping shorts in the prior day's range until better sell response stepped in. During 'I' period above, the one timeframing higher stopped at a time when there were still single prints at 28-28.50 left from the breakout and VPOC still at 25.00. A poor low was left at 19.50 on the day.
Overnight so far the range is 2419.75-31.50, versus settlement at 26.75.
Zones for today below:
Short term bull/bear: 35.00-37.00
Initial Support: 20.50-22.50 Initial Resistance: 27.75-30.25
Bias: neutral/bearish
Friday Prep
From yesterday's prep: 'A lack of buying interest could see a break lower again, possibly to retest the high volume 35/36 area. The contraction in daily ranges over the past few days may continue for now, but looking for a decent move soon and a sell-off is likely to be jumped on by hedge funds in my view.'
The range and volume distribution of yesterday's overnight market was overlapping below the prior two days and had breached below the bull/bear zone I had at 61.50-64.00. Opening below there was a caution on any longs and the RTH high ended up at the top of that zone.
A random tweet regarding a rumour that Gary Cohn had resigned from his post sparked enough downward momentum to bring in more sellers, even after the rumour was discredited. The last hour was particularly bearish seeing very negative TICK and A/D readings, and a shift of the VPOC down to 2429.75 after slicing through the composite high volume area (CHVA) and weak low shown in the chart above.
Overnight the range is currently 2424.25-30.75 versus settlement at 29.50.
Yesterday's profile has many anomalies left in it which have a high chance of being revisited. However, the pressure remains on the downside for now and my main expectation for RTH today is to balance at lower prices, probably overlapping below yesterday's range. I wouldn't expect to see any advance beyond yesterday's mid point on the upside if shorts get squeezed, and on the downside I see potential for a move down to the 2400 area if the market can't break the 33-34 resistance zone. As always, context is key and a close watch of market internals and order flow in conjunction with price action and value development is needed.
Zones below for today (overnight bull/bear zone 29.50-30.50)