Jan 23, ES Plan and Missal: Round Up
Return to balance
Image 1. Buyers not giving up. B. Watterson, Calvin and Hobbes
A very low volume day with neither party committed to a direction. Buyers have not given up their gains however as prices above 4900 may be attractive IF short-term value begins to establish above 4800.
Minister’s Missal
A period of balance after imbalance is the norm. As we continue to make new highs it is important not to lose sight of this - imagine chasing out of the gat at today’s RTH open. So today’s rest period came as no surprise despite calls to break 4900 by a lot of analysts and twitter gurus.
Further below we have left a trail of singles which may very well call for a test this week.
Image 2. ES 5D profile. Note the singles
In my view, price direction this week remains predicated on the 4840 zone. So far we have opened on a gap (eventually filled) in a seeming show of force by the buyers. Indeed we fell a couple of points shy of a historic 4900 although sellers did find this level attractive as all buying delta at open was rendered neutral by the close.
A poor high in IB led to a ‘look above and fail’ scenario which ultimately took out the ONL. Two-way trade retested the open but buyers failed to hold the level and sellers carved out a NLOD but with no further progress. Unable to see an hourly close within the prior day’s range prices once again corrected into the open but failed from there in another lower high. Understandably a frustrating day for both sides.
Settlement landed at the 4880 mark.
Image 3. Analysis of order flow at the IB poor high
The day left a ‘b’ shape profile indicative of seller absorption as buyers successfully defended Friday’s high. I will be considering two levels heading into the overnight session - 4888 and 4874 - although I will be using the PDL 4874 as the pivot heading into tomorrow. With a poor high and poor low, indecision may be a feature of the week until PCE on Friday, although I lean to some softness in the meantime.
Tuesday Plan and Levels
Pivot 4874. Below this level we have singles down to 4858, 4850, 4842 - important references to reference in case of seller initiation. I lean short into the next session at least until we see an hourly close above 4890.
a) Buyers defending the pivot and spending time above 4885 can see retests of 4900. A successful close above can see 4910 and 4935 targets above, with some possible resistance at 4921.
b) Defense of 4890 and a break of pivot/PDL can target 4858 where bids may come in. A push below could see further traction to 4848 and 4840 at a lower limit.
c) Strength in NVDA can translate to support in the indices. For the remainder of the week 600 will be a critical pivot for the stock, and by extension the overall market. Similarly a break of 195.30 on AAPL can see strength, with sub 191.50 supporting a sell. Selling could be favorable with VIX reclaiming 13.80.
Image 4. Critical ES levels
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