ES Daily Plan | December 19, 2024
My preparations and expectations for the upcoming session.
For new followers: The yellow levels highlighted at the bottom left of the chart are the primary levels that I focus on intraday. My strategy for preventing impulsive decisions at unfavorable locations involves following a simple yet effective rule of exercising caution when initiating trades outside of the yellow levels. This implies that I am cautious chasing longs above the final yellow upside target and shorts below the final yellow downside target. It is crucial to understand that refraining from chasing a trade is not an automatic invitation to initiate a trade in the opposite direction.
Visual Representation
Contextual Analysis
Significant volatility followed today’s FOMC meeting, highlighting why it’s typically wise to close all positions 30 minutes before such events and allow other traders to manage the price discovery process. The market tagged and exceeded the final downside target at 6090 during the J-period, and the subsequent bounce in the K-period failed to reclaim this level, signaling caution for those attempting to catch a bottom. This caution was further reinforced when the VIX broke above its resistance level of 16.80 a few minutes later, confirming weakness. Regular readers of this newsletter know I generally avoid fading in such scenarios, as they often signal potential for further downside—a simple yet powerful concept that helps avoid fighting the trend, which can be devastating on days like today. Make no mistake—if you stepped aside and skipped trading during the FOMC, you likely had a more successful session than the majority of traders out there. The roll gap at 6055.50 was effectively filled in the process.
ES (6040), NQ (21648), and RTY (2310) all closed below their Weekly Extreme Lows, making the remainder of the week challenging to navigate. Additionally, the VIX closed above both its Weekly (15.78) and Monthly (17.24) Extremes. Notably, ES also nearly tagged its Monthly Extreme Low at 5905 after-hours. The key takeaway is that chasing further downside is not favorable. This doesn’t necessarily mean the bottom is in for the week but rather highlights the importance of staying nimble. I would monitor whether NQ can reclaim 21648, which could open the door for 6040 to act as a magnet for ES. Failure to do so would maintain downside pressure for the rest of the week.
Significant volatility unfolded today as the market flushed, forming a multi-distribution profile with three large sets of single prints and a massive 72-handle M-period spike. The immediate attention is on today’s LOD, which was breached and reclaimed after-hours. A weak market would break and hold below this level, while failure to do so could open the door for structural fills toward the spike base.
In terms of levels, the Smashlevel is at 5935. Holding above this level would target 5968, with a final target at the resistance area between 5998 and 6008 under sustained buying pressure. Failure to hold above 5935 would target 5905, with a final target at 5880 under sustained selling pressure.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5935.
Holding above 5935 would target 5968 / 5998 / 6008
Break and hold below 5935 would target 5905 / 5880
Additionally, pay attention to the following VIX levels: 29.10 and 26.14. These levels can provide confirmation of strength or weakness.
Break and hold above 6008 with VIX below 26.14 would confirm strength.
Break and hold below 5880 with VIX above 29.10 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.
Weekly Plan
Make sure to review the Weekly Plan, which provides a broader perspective and highlights key levels of interest to observe in the upcoming week.
Weekly targets hit smoothly under sustained pressure. Incredibly grateful, Smash.
Thank you buddy! Had some longs prior 2PM and then shorts.