ES Daily Plan | February 13, 2024
The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. Therefore, the potential for moves outside of the intraday targets increases.
Visual Representation
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.
Contextual Analysis
The overnight session remained uneventful, largely attributed to numerous markets across Asia currently closed for the Lunar New Year. Trading activity remained within the upper distribution of Friday's session, indicating minimal change since the close of Friday's trading.
The RTH session initially appeared to mirror last Thursday's uneventful session. The initial balance range measured 4.5 handles (!), trading within the overnight range of 7.5 handles. There was decent selling pressure during the B-period, illustrated in the included snapshot of the footprint chart. However, there was no significant downside traction. As buying activity emerged, especially towards the end of the B-period and into the C-period, the market began to squeeze out these sellers, resulting in the formation of two sets of single prints in the C and D-periods. We have discussed the Monthly and Quarterly Extreme Highs in both the weekly and previous daily plan. This area stalled today’s upside momentum, triggering a 35-handle reversal (HOD: 5066.50). I will continue to closely monitor if the market can establish value above these levels or not, given the early stage of the month and quarter. The VIX was showing divergence by remaining above its resistance level of 13.48 throughout the entire session, making the 5067/5071 area even less attractive to chase.
Today, buyers were unable to sustain a trend day to the upside after encountering resistance at the significant 5067/5071 area. The two sets of single prints formed in the AM session were filled during the liquidation break in the PM session, along with Friday’s set, which divided its double distribution. The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. Therefore, the potential for moves outside of the intraday targets increases. In the short-term, I will use 5044 as a reference point, aiming for a retest of the 5067/5071 area upon acceptance above, while targeting 5012 and 4999 if holding below.
For tomorrow, the Smashlevel (Pivot) is 5044, a level where sellers defended following today's liquidation break. Break and hold above 5044 would target fills of today’s structure toward 5058. Acceptance above 5058 would target a retest of both the Monthly and Quarterly Extreme Highs at 5067 and 5071, respectively. Holding below 5044 would target the support area from 5022 to 5012, where the short-term value (5D VPOC) is located. In the case of continued weakness, the final downside target is at 4999.
Levels of Interest
Going into tomorrow's session, I will observe 5044.
Break and hold above 5044 would target 5058 / 5067 / 5071
Holding below 5044 would target 5022 / 5012 / 4999
Additionally, pay attention to the following VIX levels: 14.52 and 13.34. These levels can provide confirmation of strength or weakness.
Break and hold above 5071 with VIX below 13.34 would confirm strength.
Break and hold below 4999 with VIX above 14.52 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
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.
Thanks! The 5067/71 area was surgical!
Thanks Smash. Responsive selling dropped the ball on Friday. Glad they came back for two-sided activity today.