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ES Daily Plan | August 15, 2023
Constructive buyers managed to end the daily one-time framing down and establish value above the 4493/4487 area, which must hold going forward.
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The immediate level of interest is today's base of the spike.
The important 4493/4487 area was immediately put to the test during the overnight (ON) session, and encountered selling activity. This rejection resulted in a test of 4471, and similar to Friday's session, we could observe a lot of aggressive selling in that area. The passive buyers were able to absorb this selling effort, leading to a reversal. During the European session, the market started to trigger a series of stops as a result of a impulsive upside move that cleared both the high of the Asian session and Friday’s poor high. The market eventually retraced to the 4471 level prior to the RTH open, while concurrently, the VIX breached its resistance level of 15.60.
The RTH session lacked a clear directional confidence during the A-period, with the market hovering around the opening level of 4472. It’s worth noting that the A-period had a negative delta of 7K at one point; however, passive buying in that area has remained consistent over the past two sessions. Despite decent aggressive selling effort, Friday’s excess low remained untested. There was a battle around 4487 in the B-period, which the buyers emerged victorious as the C-period saw a range extension to the upside. Subsequently, the buyers started to establish value above the 4493/4487 area, while also developing higher value relative to Friday's session. The VIX returned below its resistance level of 15.60 early in the B-period. Having formed a P-shape profile, it was important for buyers to attempt a breakout from today’s main distribution. This effort would serve to demonstrate new buying interest, following the short-covering rally from the 4471 area, where notable order flow activity has been observed. This was achieved in the M-period, as the market pushed higher and formed a spike, successfully reaching the next upside target of 4507, to the tick.
Overall, today’s session was fairly constructive for the buyers who managed to end the daily one-time framing down, and establish value above the important 4493/4487 area. The daily is now in a 2D balance. I will use today’s spike base of 4503 to assess the short-term strength or weakness. Trading within and above the spike (Acceptance) is a more favorable outcome for buyers, while trading below the spike (Rejection) is a more favorable outcome for sellers.
For tomorrow, the Smashlevel (Pivot) is 4503, representing today’s base of the spike. This is also the previous week’s VWAP. Holding above 4503, indicating acceptance, would target fills of Thursday’s structure towards 4520, as well as the last upside target of 4536. Break and hold below 4503, indicating rejection, would target the important 4493/4487 area, as well as the last downside target of 4471, which passive buyers have been defending for the past two sessions.
Going into tomorrow's session, I will observe 4503.
Holding above 4503 would target 4520 / 4536
Break and hold below 4503 would target 4487 / 4471
Additionally, pay attention to the following VIX levels: 15.60 and 14.04. These levels can provide confirmation of strength or weakness.
Break and hold above 4536 with VIX below 14.04 would confirm strength.
Break and hold below 4471 with VIX above 15.60 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.