May 29, S&P500 Premarket Plan and Missal
Tonal tides.
Image 1. ES profiles, RTH Tuesday to ETH Wednesday as of 8h40EST
A sleepy first half of the day led into an afternoon liquidation on Tuesday. I noted very strong absorption at 5323-5326 intraday, with over 20k contracts absorbed on the offer at one point. A crowded trade saw weak longs exit, where support was found just above our final downside target for the day (5295, LOD 5296.75). In a surprise move that even took me off guard, we ramped up nearly to the open, clearing out all weak shorts this time.
We are seeing positioning ahead of the next big move… after nine days of balance.
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Minister’s Missal
Notes are as of 8h10EST. I wrote yesterday that I was expecting positioning this week, and Tuesday was a great example of this as both weak longs and weak shorts were cleared out intraday. What seemed to be large passive sellers may be proven correct as we are headed into a potential gap down as of writing. Inventory is net short, so inventory correction rules apply at the open.
Image 2. ES daily profiles
To simplify matters here, sellers are looking for trade below the prior gap (5275). That represents a break of balance. Any further attempts to reclaim 5300 that reject can release pressure to the downside this week and into next. Following Wednesday’s globex open I noted on my feed that 5307 was a critical level for sellers to break. I stand by this early assessment and will consider it Wednesday’s RTH pivot. This is also the base of Tuesday’s buying tail ergo a level buyers want to solidify with time above.
Ultimately buyers want to see acceptance above Tuesday’s VAL at 5315 which they will target early on. This scenario can see more balance ahead of Thursday’s GDP and Friday’s PCE.
Wednesday Plan and Levels
Pivot 5307. Expecting range of 30 points with a possible 10 point extension.
a) “Look below and fail” of the ONL, time above pivot targets 5315, with 5325 area of heavy orderflow above. An hourly close above that aims for 5342 where sellers are likely to be encountered.
b) Defense of 5315 and time below pivot target a break of ONL / daily close 5286. The main level below is 5274, followed by daily close 5268 to singles at 5261 - a zone where longer-term buyers may find interest. A total wash, less likely in my view, could target NPOC / HVN 5247. Refer to Image 2 above.
c) Sellers may gain momentum with VIX over 14.25, while buyers may see some relief with the index below 13.40. AAPL was a fantastic proxy pivot yesterday, I may lean on proxy pivot 189.70 in today’s session for clues, as well as NVDA level 1132.
It gets a little complex here - I suggested NVDA 1080 for the indices on Tuesday - the ticker stayed above while the market initially sold! But look that we recovered nearly all of the day’s losses. The fact that NVDA stayed above this level gave less confidence to the start of strong selling - I prefer to see confluence for definitive statements intraday and this is a great example of that nuance.
Image 3. 4H ES levels
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