September 19, S&P500 Plan and Missal
Grotesque Bride
Image 1. Fed dot plot. H. Anno, Neon Genesis (1995)
I got my rate cut on time - but over budget! However by the weekend it was clear that the media was priming the public for a 50bp cut that was likely planned two FOMC meetings in advance, if not more. I will cover this cut more in depth on the weekend.
Does this mean we are headed into a recession? No - first of all, we may already be in one; second, causality is backwards! Rates cuts don’t cause a recession, they may simply take place when a recession in underway. Correlation vs causation.
Crow’s Nest
Welcome to new all time highs. I was not bearish on Wednesday’s close despite the sell off. True, it was a sell-the-news event: the simplest explanation. Furthermore, nothing in the structure or flows indicated a bearish turnaround (yet), despite the comparisons to 2007. Structure remains intact.
I am now referring to weekly levels at this point, with main target on the upside around 5820-22. It is possible to bid into the weekend, with some resistance at 5790.
Image 2. ES (December EPZ24) daily profiles
In case of a gap open, gap rules apply. A fill of the gal and acceptance in the prior day value area leans in favor of the sellers. A look below and fail and/or failure to close the gap and acceptance above the ONH leans bullish. I refer to 5755 or the FOMC high as the day’s pivot.
Image 3. ES Wednesday RTH to Thursday ETH as of 8h50EST
Thursday Plan and Levels
Pivot 5755. As of 8h20EST, the volatility model is estimating 54 points with 11 points possible overshoot.
a) Defense of 5740, or early bid pivot / gap open, targets volume over 5780. This paves the way for 5795, 5803 where resistance may be encountered. Further above are 5812 and 5822.
b) Time under pivot targets 5730 balance high into heavy liquidity at 5725 where a bid may be encountered. Volume below looks for PDO 5707, with 5690 and buying tail 5679 further below.
c) VIX pivot at 17.40 again. Selling could be brought with prints over 18.00, with buying favored below 16.45.
Image 4. ES 4H levels
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