Feb 16, ES Plan and Missal: Reality of a Lower Order
Reflation PPI Friday?
Image 1. Further on, Nothing!. Tadeusz Kantor
Tadeusz Kantor, a Polish painter and director - arguably a principle father of post war avant-garde theatre, expanding the limits of convention. He is celebrated for abandoning well-defined relationships, often blurring the line between audience and stage. Before I digress too far, I am reminded of his famous quote, “Further on, nothing!” This is as we float to highs in the face of falling spending, high rates, and inflation creeping up. Maybe none of it matters anymore?
I paid homage to chess master Mikhail Tal’s unconventional strategies in yesterday’s intro to the Missal. This played out but not exactly in the way I thought it would, meaning I got outplayed by Tal all the same! Sellers had almost everything going for them - a break of structure, an unfilled gap, trapped buyers - except for one thing. The buying volume at close on Wednesday.
Indeed those buyers expected a payout and the telling sign was the open at the prior day’s highs. But whether I got out-strategized or not, we did not get out-risked. After all I made a point that “the 5012 short-term value level will play a critical role; time spent on either side will likely decide the direction of close for the week.” We spent the entirety of Thursday above this level, briefly dipping down into the 5013s before being bought up. As a follower pointed out, that dip was precisely at the RTH VWAP SD2. And here we are closing Thursday in the prior week’s upper distribution.
So do I think we’re done with 5,000 then? Nah…we just need to get OPEX out of the way first.
Image 2. Thursday low at RTH VWAP SD2
Minister’s Missal
I’ll keep this short today given PPI tomorrow at 8h30EST which will likely bring volatility; I may update levels premarket if need be. There is no footprint/candle review of the lows today as followers failed to get the number of required retweets to get the ‘reveal’ of the key information indicating a reversal (hint: it was a very specific type of exhaustion). Try again next time! :)
Image 3. Wednesday RTH, Thursday ETH and RTH
The day left a double distribution, after finding support at the prior day’s closing price. Sellers were initially present but no period closed within the prior day’s range - even the D period seller initiation closed two ticks above the PDH. Much like Wednesday’s session, this type of price action gives very important clues to the direction the day can take. In addition to remaining above our 5012 pivot!
The weekly is in balance although the daily is OTFU and we closed the day above the PWH. With ATHs just over a dozen points away, Friday may very well see another high print. However PPI is the big question mark. The CPI came in hot this week but was shrugged off, we can’t promise the same for PPI.
I’ll be considering 5032 breakout/LVN as a pivot headed into tomorrow.
Friday Plan and Levels
Pivot 5032. Which distribution from Thursday’s session will find acceptance? Tomorrow will likely be a frustrating session for many. If you don’t have a good grasp on the dynamics it’s a perfectly fine idea to sit out one session. In short, buyers are aiming for a break of the highs, while sellers look for time under 5020 to open lower levels. This 5020 has been the HOD for three sessions so it’s a hard line of defense.
At time of writing I am targeting a 35 point range with possible 20 point extension. Monday is Presidents Day and the market will be closed.
a) Buyers defending pivot early on can target the LVN at 5054 and ATH 5067. In case of further momentum, recall the important 5079 level above. While less likely, in case of euphoria recall weekly plan levels 5088 and 5097-5100.
Buyer LIS 5020.
b) Sellers might be rescued by a hot PPI in their favor. The trend is clearly up and they have been largely out of the picture. A defense of 5054 and time under the pivot will target a return under 5020. A failure to bid there could see a clean out to 5012 and 4997 below. Again I am not expecting wild swings on OPEX, but recall 4990 could revisit 4982 further on.
Recall further levels 4946, daily low 4937, and 4929.
c) I will largely maintain VIX levels, with under 13.70 supporting a run to ATHs , while prints over 15.40 support selling. TSLA can stay bid over 195, although dips are possible. AAPL maintaining 184.50 can support the indices. Consider 17915 the NQ pivot for another push into levels above 18k.
Image 5. 4H TF, Critical ES levels
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