Feb 20, ES Premarket Plan and Missal
Tuesday levels and context.
Image 1. ES 4H main levels
Welcome back from the holidays. I hope everyone enjoyed a three day break from the markets. Last week saw decent volatility with the CPI and PPI - both hotter than expected - managing to flush out both short-term longs and shorts while new positions were quietly being built.
I hope you have made good use of the levels I share. Again these are not guaranteed areas to press the button long or short, but areas were I have noted interest. Context will provide you with the answer. This is the main focus of my work, to provide a lens with which to interpret information from the market. Buffets are cool, but I hope that you know how to cook too!
And even if you were to long/short every level (please don’t) with a reasonable stop and take profit target, you would probably make out okay as long as you don’t oversize. What I am stressing is not to blindly trade, but to understand what is going on at any given time and which side is strongest. And to recognize that the market has a memory, often measured in years…even as contracts rollover! Always look left…
Minister’s Missal
Sellers took some initiative from the highs this past Friday, successfully defending from another attempt at ATHs. And that has been relentless. A 5-7% correction is long overdue, and this is something the sellers have been attempting. I don’t think this happens until we can decisively break the weekly balance to the downside. But these are levels sellers are aiming for if they are serious.
Speaking of sellers the overnight session is showing weakness, trading net short inventory as of writing. Once again, 70% of time net long/short trade at the open sees some inventory correction. But a continuation of the overnight direction immediately at open can be a sign of that side’s strength.
Image 2. Friday -Monday RTH, Tuesday ETH as of 8h25 EST
Buyers’ goal is to see an hourly close within Friday’s value area (above 5027) for a traverse to the highs. A break of the nascent daily OTFD implies a rejection of further downside. This can propel an aggressive move to the upside to new ATHs. On the other side, sellers want to gain momentum below Friday’s low - a successful hourly close below 4990 could lead to 4972 being challenged. A break of that daily low could be the gate to lower levels and the ball in sellers’ court.
I’ll be considering 5012 LVN/Euro session high (as of writing) as pivot for the day’s session.
Image 3. Prior week profile and balance areas
Tuesday Plan and Levels
Pivot 5012. A solid hourly close above the pivot would like to then see a strong close above Friday 4527 VAL for more upside potential. Sellers need to keep the pressure early on - preferably spending time below 5004 LVN to then knock out the 4990s for any downside progress.
a) Buyers defending 5004 and managing their way above 5027 then target 5043 weekly value, and Friday high 5054, with ATH 5067 above. Note our further level 5079, a fib extension.
Buyer LIS 4990 NPOC.
b) A defense of the pivot from below or momentum below 5004 targets 4990 NPOC with 4972 as a further target - although the 4981 buying tail may find a bid along the way. Further targets from the weekly plan, with the main one being 4956 - not necessarily today!
c) Watch VIX over 15.70 for seller strength, and conversely under 14.64 supporting buyers.. AAPL probably needs to solidly regain 183.50 to support the indices, similarly with NVDA over 735. maintaining 184.50 can support the indices. Finally 17765 on NQ is an area buyers need to reclaim to preclude a steeper sell.
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