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ES Daily Plan | February 15, 2023
Today was no exception to the usual volatility that accompanies the release of CPI data. The price action was erratic, not just during ON, but also during RTH.
4155 of interest given the notable orderflow activity.
Just a quick update to let you know that I'll be away from the desk for the next few days. The daily plans will still be posted as usual, but in a condensed, commentary-free format. Regular, detailed plans will resume on Wednesday, February 22nd.
In the previous plan, I stated that I was being careful with shorts above 4135-4125 because of the weak structure above and the imbalanced profile to the upside from yesterday. During the overnight (ON) session, trading occurred near the upper end of yesterday’s main distribution. Buyers were able to break out from the main distribution during the European session, resulting in a decent move prior to the CPI data release. Today was no exception to the usual volatility that accompanies the release of CPI data. The price action was erratic, not just during the ON session, but also during the RTH session. Keep in mind that trading on days like today is not obligatory. The ON session's high was 4188.25, which was 3.75 handles away from the last intraday upside target of 4192.
As mentioned earlier, the RTH session was characterized by volatile price action. The initial balance was able to clean up the poor structure both in the upward and downward directions. The A-period filled yesterday’s highlighted poor structure, and the B-period cleaned up the weak high, which was the 3-day balance high, but buyers were not able to follow-through. Note how yesterday’s imbalanced profile to the upside was resolved during that impulsive move in the B-period. There is little else to say about today's RTH session, except that traders who held positions for too long experienced losses in both directions.
I will interpret the daily as one time framing up following today's clean up of the weak high from 2/9 and forming a higher low. Today’s profile contains many structural deficiencies. We have weak areas around both the upward and downward excess, highlighted with blue arrows. The 4155 level is my short-term level of interest for tomorrow, given the notable orderflow activity witnessed during the closing session, as heavy and aggressive buying was absorbed by passive sellers, resulting in a closing drop. Note the delta profile.
The rest of the levels basically remain unchanged. The 5-day VPOC shifted up to 4145 (from 4135), and the 20-day VPOC shifted up to 4125 (from 4030), which validates the significance of the yellow area. That is more bullish than bearish as value is being established at higher prices (Acceptance). Last week was characterized as an inside week, and currently, this week is also an inside week, indicating that the market is coiling for a move.
Going into tomorrow's session, I will observe 4155.
Holding above 4155 would target 4175 / 4192
Break and hold below 4155 would target 4135 / 4125 / 4103
Additionally, pay attention to the following VIX levels: 20.00 and 17.82. These levels can provide confirmation of strength or weakness.
Break and hold above 4192 with VIX below 17.82 would confirm strength.
Break and hold below 4103 with VIX above 20.00 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. Twitter: @smashelito | FAQ: smashelito.com