Just a Stroll

Buyers on the edge

Image 1. Not one of these!!

Day Review

A quiet Asian session much like the prior one saw a test of Monday’s VPOC which held the attention of buyers. Interestingly it was the same session that initiated into Monday’s high before finding some resistance, but the European session took up the mantle and into our two target 4425 and 4436. It is above the second level where resistance was encountered leading to some pullback into the open.

Image 2. Prior day RTH and ETH profiles

Sellers immediately stepped in at open, taking advantage of the repricing achieved overnight to trade into ETH VWAP. Buyers stepped in but managed to trade only into A period halfback before sellers reemerged to gap close in B. Despite a spike in H period which retested B period lows/PDC (our day pivot!), sellers continued an effective OTFD into the prior day open (and our critical 4396 level). Buyers stepped in once again on seller exhaustion to retest the pivot in L, briefly trading over before sellers emerged once again, this time breaking the day’s low but only by two ticks. Inventory correction saw us close one tick under 4400. The profile is indicative of seller absorption (b-shape).

Indeed a frustrating close for both sides. We are now OTFU on the daily and on day of balance. Longs would have done better with a close over 4406, but if 4420 were to give by tomorrow’s session, shorts could be effectively trapped. If I had to pick a side, I would guess a slight favor to longs…IF we don’t see a daily close under 4385. Interestingly we closed the day on positive delta, indicative of buying on the way down and no liquidation into close (see Image 3 below). Someone went home with this (I did not).

For tomorrow I will inch the pivot up to consider 4412 - representing the H and L period resistance and day’s VAH.

Your support helps to keep my work going - tip jar!

Image 3. 12k delta at close, 4399 settle.

Landscape and Key Levels

Image 4. 5-day; prior balance; and daily profiles

Tomorrow’s Missal

Plan mostly unchanged from yesterday’s. Sustained momentum above 4425 can open last week’s poor structure for repair. Sellers look to defend this area.

Day pivot is 4412. Additionally, watch for VIX to stay under 17.6 to support buyers. A break of 16.61 can help push prices lower however. Oil is another interesting proxy, buyers would like to see CL hold above 80.

• Buyer scenario. Buyers defending PDL 4394 or ONLs will look to see an early close over pivot and momentum over 4425 where longer term sellers may once again step in. Open above pivot would give initial impulse to the longs. Above 4436, further targets are 4447 and 4461.

• Seller scenario. Sellers will look to break ONL and time under 4385. A loss of 4367 can open further levels to 4354 and 4337.

• Notes. PMI at 9h45EST.

Don’t maintain bias in the face of contradicting information! Capital preservation is key.

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