ES Daily Plan | April 14, 2023
Today's session resulted in a multi-distribution trend day towards the upside, which followed the reclaim of 4130 in the RTH session.
Is a new phase of imbalance imminent, or will the market return to value?
Contextual Analysis
The price immediately probed below the previous day's low during the overnight (ON) session, effectively resolving the unfinished business that was left unaddressed (Poor low). Keep in mind that repair of structure is generally only valid during regular trading hours (RTH). However, there are instances where the market can efficiently address these issues overnight, as was the case today. The price, however, swiftly returned within the previous day's range after the repair. Our level of interest was 4130, which was a crucial level for buyers to regain. A decent downside reaction was observed as sellers were successful in defending this level during the European session. Following the release of the PPI data before the opening of RTH, the market responded positively.
The RTH session opened right at 4130 and the market remained within a very right range during the A-period. Although there were a significant number of aggressive sellers below 4130, passive buyers absorbed this selling pressure, allowing buyers to regain control of 4130. Note the added delta profile to the right. As mentioned in previous plan, the medium and short-term value (20 and 5-day VPOC) are located at 4130, which is of interest as directional moves are often initiated from high volume nodes (HVN). I think we can agree that a significant directional move was observed today. The market was essentially one time framing up throughout the session, and the last intraday upside target of 4158 was reached already in the H-period. 4158 aligned with the upper end of the multi-day balance area, making it a good location to book profits. The VIX did break the support level of 18.14 when ES was trading at ~4150, indicating the possibility of hitting the last target. However, since the VIX didn't decisively break below 18.14 (until much later), it was less attractive to pursue buyers' upside follow-through, particularly given that we were trading near the balance highs. Other traders were responsible for making that price discovery as I did not pursue it. As always, refraining from chasing a trade is not an automatic invitation to initiate a trade in the opposite direction.
Today's session resulted in a multi-distribution trend day towards the upside, which followed the reclaim of 4130 in RTH. The market left behind poor structure consisting of six (!) sets of single prints. The daily is now one time framing up. The current conditions are fairly straightforward. Today, buyers broke and closed above the previous multi-day balance high, indicating that the market may have shifted from balance to imbalance. That being said, buyers want to see an upside continuation fairly quickly given the aggressive buying at today’s high. To maintain their directional conviction, buyers want to hold above 4160, which is the Smashlevel (Pivot) for tomorrow. The more aggressive level to observe is 4170. Failure to see an upside continuation will attract responsive activity to target today's poor structure, with 4130 being the primary downside magnet.
Going into tomorrow's session, I will observe 4160.
Break and hold above 4160 would target 4170 / 4192 / 4208
Holding below 4160 would target 4146 / 4130
Additionally, pay attention to the following VIX levels: 18.70 and 16.90. These levels can provide confirmation of strength or weakness.
Break and hold above 4208 with VIX below 16.90 would confirm strength.
Break and hold below 4130 with VIX above 18.70 would confirm weakness.
Overall, it's important to exercise caution when trading outside of the highlighted yellow levels. A non-cooperative VIX may suggest possible reversals i.e trade setups.
Be sure to check out the Weekly Plan, which provides a broader perspective and highlights significant levels of interest to watch in the coming week.
Disclaimer: Futures and options trading involves a high level of risk, with the potential for substantial losses. The information provided in this newsletter is for informational purposes only and is not intended to be a trade recommendation. It is the responsibility of the reader to make their own investment decisions and they should seek the advice of a qualified securities professional before making any investments. The owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.
In the noise of multiple of such substacks, the gem is here.. clean as a whistle and to the point analysis.... Great week Smash... looking forward to next week...
Hi Smash, have a qq, does the single prints makes the poor structure or do we need to look into something as well. By the way thank you for the insights that you are providing.