December 19, ES Premarket Missal: ATH
Slow dance.
Image 1. Buyers still feelin’ good. Flapper culture flashback, 1920s
Minister’s Missal
Yesterday’s subheading was ‘let others find the top’ - this was a warning not to short against the general trend as buyers remain steadfastly in control on all timeframes. This is especially true as we near ATHs on the S&P500 and have surpassed them on two other major indices. The day was very quiet, playing out as a ‘look above and fail’ but over the course of the entire RTH session! We tested into our 4802 target with a day high just one tick off before sellers came in to see the close at support around 4790.
I hope that the notes I share everyday are helpful.
We opened yesterday's session with a small gap that sellers were nonetheless unable to fill. Opening gaps are very important contextual information, and in yesterday’s case the VWAP as well - as the IB was spent mostly around VWAP SD1. With sellers unable to trade below VWAP, buyers stepped in for a break of 4790, a key level. The slow grind up managed to finally break 4800 by a couple of points.
As of writing we are less than half a dozen points off ATH, and sellers are once again out of the picture.
Image 2. Monday ETH as of 8h05 EST
Overnight inventory is net long. Recall that net long or short inventory at open typically sees a 70% chance of correction. A lack thereof signals strength and favors early continuation. I remain keen on the 4790 level which was resistance (see last week’s high) and now potential support. This is an important level for the day, roughly coinciding with yesterday’s close and VAL.
Tuesday Plan and Levels
Pivot 4790. Plan levels are once again mostly unchanged.
a) A break and hold of ONH/4802 in IB targets ATH 4808. Sellers may be found at 4815 and then 4825. Buyers again supported by NQ above 17000. As explained above, watch 4790 to hold as this is a critical level now for buyers. Bids may also be found at 4770 in case of a break.
b) With seven days of OTFU buyers are relentless and sellers need something to show for it. Sellers’ main goal is to keep pressure below pivot, rejecting price discovery into and above the ATH. A break of 4780 ends daily OTFU, targeting 4770 and the Friday poor low 4758 and finally the buying tail at 4746 where patient buyers may be found. At an extreme, mind the singles to 4736.
c) The VIX was unable to print an hourly close above our key level 12.54 yesterday, supporting continued buying. This level remains relevant, and a print under 12.25 can be indicative of more aggressive buying.
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