December 22, ES Premarket Missal: Traps

Image 1. Sleeping. Brown bear (Ursus arctos)

Minister’s Missal

Thursday’s action largely fit our expectations resulting in a balance day - and now five days of balance, image below. What was perceived as favorable GDP data helped the indices to spike higher from what was already long inventory ahead of the close. We often expect some inventory correction at the open, which saw sellers active much in the same way that the net long inventory churned up late/trapped shorts from Wednesday’s close in the ETH session.

Despite an F period seller initiation, prices were not able to reach 4750 as volume faded and responsive buyers stepped in. Ultimately we saw an end day spike into the close, making a NHOD. This action served to fill in the aggressive liquidation tail from Wednesday, filling as high as Tuesday’s opening buying tail.

Image 2. Five day balance, ES

For today, Friday’s ETH sees a further fill above the M spike base, an early reveal of buyer strength. Buyers will need to defend the 4784 price, our main reference today, to make further progress into the 4800s.

Volume is winding down ahead of the holidays so large moves are still possible in a low liquidity environment. As of writing, core PCE came in soft, an apparently welcome data point for a rate cut regime.

Image 3. Wednesday ETH as of 8h40 EST

Friday Plan and Levels

Pivot 4784.

a) Support at the pivot (ONL) targets a break of ONH. An hourly close above can then move on to the HVN at 4815 and the large buying liquidity (whale) at 4821, with the highs of 4831 above. In case of an ONL break, below buyer support could come in at 4776.

b) Sellers look to defend from an hourly close above 4815 which can spark further short covering. Pressure below the pivot targets 4770 and a break of PDL 4755 for our prior lower targets.

c) The VIX would need to move above 14.35 for healthy support of sellers. Buyers can be supported with prints below 13.3.

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