ES Daily Plan | December 20, 2023
The session concluded with an upward spike, as the M-period (last 30 minutes of RTH) printed a new daily high. I will use the spike base at 4817 as a short-term reference.
For new followers, the yellow levels highlighted at the bottom 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.
Buyers pretty much instantly negated the after hours trading weakness during the Asian hours in the overnight session by reclaiming the previous week’s high and our pivot for the session at 4792. The potential for weakness was only in play if sellers were to defend 4792, as discussed. During the European session, the upside momentum continued, resulting in the exploration of prices above the previous day's high.
The RTH session mirrored yesterday's, with limited trading activity observed below the opening level. The main upside target was the non back-adjusted all-time high (ATH) at 4808.25, which was already tagged and exceeded during the A-period. In other words, the ES futures marked a new ATH. It's noteworthy that the SPX has yet to reach its ATH, situated at 4818.62, which roughly corresponds to 4870 for ES. The trading activity following the initial balance, representing the first hour of trading (A and B-period), was rather uneventful. Buyers successfully held above the prior ATH, testing it in both the F and H-periods—to the tick. Nevertheless, they fell 7 handles short of reaching the final upside target at 4828 (HOD: 4821.50). Carry forward the prior ATH as a weak reference.
The market sustains its upside momentum, following the breakout from Friday’s inside day. Consequently, the non back-adjusted all-time high (ATH) at 4808.25 was tagged and exceeded. The session concluded with an upward spike, as the M-period (last 30 minutes of RTH) printed a new daily high. I will use the spike base at 4817 as a short-term reference to gauge the state of the market participants.
The general guideline is as follows: trading within and above the spike base of 4817 (Acceptance) presents a more favorable outcome for buyers, targeting the final weekly upside target at 4855. Conversely, trading below the spike base (Rejection) is a more favorable outcome for sellers aiming to clean up today’s afternoon pullback low at 4808.25 and target the previous week’s high at 4792.
For tomorrow, the Smashlevel (Pivot) is 4817, representing today’s spike base. Holding above 4817 would target an upside continuation towards 4828, 4840 and the Weekly Extreme High of 4855. Should 4855 be reached tomorrow, I will book potential profits and call it a week considering that the short-term value (5D VPOC) remains at 4767. Break and hold below 4817 would target a cleanup of 4808.25, as well as the final downside target of 4792, in the case of continued weakness.
Levels of Interest
Going into tomorrow's session, I will observe 4817.
Holding above 4817 would target 4828 / 4840 / 4855
Break and hold below 4817 would target 4808 / 4792
Additionally, pay attention to the following VIX levels: 13.14 and 11.92. These levels can provide confirmation of strength or weakness.
Break and hold above 4855 with VIX below 11.92 would confirm strength.
Break and hold below 4792 with VIX above 13.14 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.