Jan 26, ES Plan and Missal: Someone Knows

Prices just too good to be done selling.

Image 1. Now the selling’s just annoying. Gregory, New Yorker

This will be a quick update since we remain in balance, and more importantly I have spent a couple of hours on educational material posted earlier. The Reverend needs a break, too.

Interestingly I led into yesterday’s Missal and plan with a diving board image, and the ramp ahead of open on heavier unemployment and generally mixed data gave us just that. Shortly after the open a ‘look above and fail’ saw us trade back through open and towards the PDC, which effectively marked the LOD.

We are now in what I consider a four day balance area.

Image 2. ES daily profiles

Minister’s Missal

Thursday formed a near-perfect balance, closing near the highs after finding support at the PDC. There is some indecision but we are finding acceptance over the 4900 level. I do think there are some heavy sellers present given my read of the tape, but this does not mean we can’t go higher first.

The big event aside from PCE Friday premarket is FOMC next week. Market participants are effectively in limbo until J. Powell gives more direction on Fed rates heading into the year. As it is, probability for a Rate cut in Q1 have fluctuated wildly. Proxies to watch are the USD, CL, and TLT. It is just my opinion however I do not believe there will be a rate cut on the table until at least the second half of the year.

With crude skyrocketing, is it a good idea to see the Fed cut rates just as inflation seems to have stubbornly stabilized above the Fed’s desired 2% goal? He is stuck between a rock and a hard election year this is true.

Image 3. Estimated percent chance of a change in rates in March receding

We remain OTFU on all timeframes.

Thursday Trade Analysis

I posted this screenshot in the educational content today but it is worth reposting here. Recognizing these patterns to help you find ideal trade locations is your first step to adequate risk management.

Image 5. Analysis of absorption, ES Thursday low

Friday Plan and Levels

Plan largely unchanged. On review, I was a bit off with the prior day pivot although the levels worked well. Going into Friday 4927 will be key as the day pivot. This has the potential to let off some pressure in the form of price discovery above. Buyers look to spend time above 4900 and close above the pivot, on the other hand sellers still need to show an hourly close below 4900 to open any downside progress.

PCE at 8h30EST may bring increased volatility.

a) Buyers maintaining above 4916 can set up a test of pivot where we also have heavy seller presence. A close above can target 4935 and 4942 to 4955 where sellers will likely step in.

b) Sellers maintaining below the pivot target an hourly close below 4907. Time below 4900 can see attempts at balance POC 4883. Further below is balance low 4874 and Friday VPOC 4868, where bids may be found. Finally, watch the area of singles to 4858.

c) The VIX above 13.40 can see some selling pressure in the indices. Notably NQ is the weaker of the two. Additionally, look for AAPL above 195 and NVDA above 600 to lend support.

Image 4. 4H TF, Critical ES levels

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