E-Mini S&P 500 Futures

In the recent posts, I was concerned about the market being "too Long" and was cautious on the Long side. 1098-1099 Pre-Market Resistance provided ideal Trade Location to initiate Shorts. ES opened at 1091.25, and was unable to move above the opening price which was a red flag. The Financial Sector ETF (XLF) sold off right from the open, which was another big red flag. The Trade Plan called for monitoring XLF for an upward move. Based on this Bearish Context, I was leaning Short right off the open. The break below Pre-Market Support also signaled that Sellers were in control. The retracement to 1089.50, following the break below Initial Support provided ideal trade location to initiate or add to Shorts. I'm usually flat going into an economic release, but in this instance, I felt confident holding short into the release -- given the bearish context, the risk/reward was simply too good to pass up on holding Shorts. The Trade Plan called for accelerated selling below 1086.25, and the primary target was the 1076.50 gap fill. I was anticipating a test of the 1074-1075 Area, but Responsive Buyers quickly pushed price up after the gap fill. Given the market context, I was leaning Short all morning expecting a test of 1075. A push above the VWAP around 12:25 PM (CT) invalidated the Trend Day scenario, and even though I was still shorting at Resistance, I was open to the possibility of a neutral day with a short squeez into the Close and was very cautious on both sides in the afternoon. Nasdaq (NQ) was leading. The 1087 Overnight Low provided good trade location to enter Short on first touch, but I was not pressing the trades in the afternoon since the trend day scenario was not playing out. The best opportunity was in the morning, and my focus in the afternoon was capital preservation. Around 2:20 - 2:30 PM (CT), we got a final push down but Responsive Buyers were active and the VPOC shifted up to 1082.25 and served as a base for the rally into the Close. I saw some very extreme positive NYSE TICK readings on that move up; TICK readings ranging from +1400 to +1700. This can be interpreted in two ways: 1) the move up to 1095.50 is an exhaustion move in which the Buyers who wanted to Buy completed their Buying, and now that the Buyers are done buying, we may head down or 2) the TICK Extremes indicate strong bullish sentiment and the market is now primed for a move to 1129. I don't know which scenario will play out, but the beauty of using market-generated information is that we don't have to KNOW which way the market is going to go in order to take advantage of the opportunities. We just need to be prepared for both scenarios. Hope you all did well today!

Notes for Overnight Session

Buyers are currently in control. We have Support below at 1086.25-1087, followed by 1082-1084. Price should stay above 1083.75 on any pullback in order for buyers to remain in control. A break below 1082 could shift control to the Sellers, and we could get a trend day to the downside. Otherwise, Buyers will attempt a push above 1099 and test 1103.25 followed by the 1107-1109 Area.

ES 5-Minute Chart

ES Day Session Volume Profile Chart