ES Daily Plan | August 1, 2023

Despite the initial struggle, the buyers managed to close within Thursday's upper distribution.

Given the uneventful nature of today's session, all levels remain unchanged.

ES Daily Plan | August 1, 2023

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Contextual Analysis

As today's session was largely uneventful, I'll keep this brief. The overnight (ON) session opened right at the Smashlevel of 4609, and the buyers immediately made a push higher, sweeping the stops above Friday’s high. In the absence of a upward continuation, the market reversed, breaking below 4609, and eventually testing the next level of interest at 4595, where buying activity emerged (ONL: 4595.25).

In the RTH session, the battle of the 4609 level continued. The RTH open was similar to the ON open, with an immediate push higher that swept both Friday's high and today's ON high, before reversing its course shortly after. Throughout the session, the VIX hovered near its resistance level of 13.94, briefly breaking above it during the initial liquidation. However, it quickly retraced below as buyers stepped in. During the AM session, there was a higher volume of trading activity above 4609. However, in the PM session, more volume was observed below 4609, as sellers actively defended that level. In both the H and M-periods, the market made a lower low intraday. During the H-period, the VIX attempted to breach above 13.94 for the second time, but failed once again. During the M-period, the VIX was crushed and actually made a lower low, making it challenging to expect a closing collapse. Instead, there was a massive closing squeeze.

Given the uneventful nature of today's session, all levels remain unchanged. The struggle for sellers to gain meaningful downside traction continues, as buyers remain in control of the auction, managing to close today’s session within Thursday’s upper distribution. After breaking out from the 4-week balance area in mid-July, the market has been consistently establishing value at higher prices, demonstrated by the upward migration of both the short-term (5-day VPOC) and medium-term (20-day VPOC), now at 4605. As discussed in the Weekly Plan published Saturday, the 4609 level will be of interest in the short-term.

For tomorrow, the Smashlevel (Pivot) is 4609, representing both the value area high from the previous week and also the high from two weeks ago. Holding above 4609 would target the resistance area from 4623 to 4633. Take note of the 7/27 ON high at 4634.50, which is untested in RTH. Break and hold above 4633 would target the prior Weekly Extreme High at 4650. Break and hold below 4609 would target 4595, as well as the last downside target of 4584, coinciding with the previous week’s VPOC.

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Going into tomorrow's session, I will observe 4609.

• Holding above 4609 would target 4623 / 4633 / 4650

• Break and hold below 4609 would target 4595 / 4584

Additionally, pay attention to the following VIX levels: 14.28 and 12.96. These levels can provide confirmation of strength or weakness.

• Break and hold above 4650 with VIX below 12.96 would confirm strength.

• Break and hold below 4584 with VIX above 14.28 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.

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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.

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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.