Jan 11, ES Premarket Missal: Eyeing SPX
CPIgnition
Image 1. Master of liquidity, Dutch angle. Janet Yellen
Sometimes my read is incomplete based on the available information. Regardless we have a plan and levels to account for all scenarios, with Wednesday pivot at 4798. My expectation was one of balance as I interpreted Tuesday’s close on the weaker side. However by open this should have been clear that the buyers were in a better position following a higher high and then low in the European session with reference to globex.
Indeed the IB was suggestive of balance initially but the clue was the break of the ONH and PDH. Finally the important piece was the retest of our pivot (one tick off) of 4798 in D and E period, leading to a grind up and imbalance to new highs on the year. This reached my 4824 level and surpassed it by nearly five points before sellers emerged on weak buyer follow through to see inventory correction into the close.
Image 2. Wednesday RTH to Thursday ETH session as of 8h15EST
Minister’s Missal
Contrary to my expectation of balance Wednesday formed a double distribution with LVN at 4815. The ETH session 30 minutes ahead of the CPI release (as of writing) is showing further acceptance in and above the upper distribution, making a high of 4838. This is a few points below the ETH ATH of 4841. The data release at 8h30 will likely offer volatility so the levels below in the plan are within a wider range than usual for a daily plan.
I do think the CPI comes in a bit cooler, especially as this metric has become increasingly politicized. Do not forget this is an important election year. This can translate into some favorable support in the market. While a drop in the CPI is largely priced in at this time, a confirmation print can see prices solidify here and ‘see’ what is above. Regardless of what plays out, play level to level.
Thursday Plan and Levels
Pivot 4805. This is Wednesday M period base and the level of breakout on what I consider a two day balance. A rejection of prices above could see further weakness and a the potential for a D close in the 4700s. Acceptance could mean the SPX ATH of 4857 tested and surpassed.
a) A defense of pivot after the CPI release with no close below targets the ONH/4841. Further above are 4857, 4870, and 4890.
b) Sellers defending 4841 in RTH target a return under the pivot, although bids may be encountered at 4815. An houlry close under pivot targets PDL 4792, Tuesday’s LVN at 4782, and daily low 4767.
c) The VIX level remain unchanged once again. Under 12.80 can support the case for a run at ATHs, while sellers want prints above 13.40 mark. AAPL holding 185 can be a bullish signal. On the other hand TSLA seeing pressure below 233 can see support further below at 227. Finally, BTC with subsequent hourly closes over 48k likely sets up for a test of 50k.
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