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ES Daily Plan | June 28, 2023
Multi-distribution trend day leaving behind six (!) sets of single prints - emotional. So, how much new buying interest do we have following today's short-covering rally?
Some fills are already in progress.
The spike base of 4373 from yesterday’s closing session was our pivot for today. This level was immediately reclaimed after hours yesterday, and during the Asian trading hours, the market revisited and defended this level multiple times. As a result, the next level of interest at 4385 was tested, where notable absorption was observed in the previous session. The European session swept the prior L-period high, and a reversal followed, essentially retracing the gains from the Asia session. Before the RTH session opened, sellers made another attempt to push the price below 4373 but were unsuccessful once again. This was my only trade today, as I was away from the desk during RTH. I shared a visual of my trade on Twitter, humorously commenting about my "green day" as the market proceeded to rally ~50 handles from the pivot. The next session always awaits.
The RTH session was emotional to say the least. The low of the day printed at 4374.50 during the initial balance, indicating a rejection of the lower prices of yesterday’s spike area, which is the most bullish outcome, as discussed. The sellers revealed another sign of weakness as there was no 30-minute period close below the highlighted inside week. In the Weekly Plan, we covered the general guidelines and principles associated with inside weeks, and the potential targets in the absence of continuation. Change took place in D-period, leading to a quick trip to the last upside target of 4398. “The primary objective for buyers is to end the daily one-time framing down, which can potentially trigger a short-covering rally”. The F-period marked the end to the daily OTFU, resulting in a massive squeeze, taking out three daily highs and leaving behind very poor structure to carry forward. It was notable that the VIX didn’t confirm the strength by maintaining above its support level of 13.54. Does that increase the odds of fills below? Observe.
Today’s session was a multi-distribution trend day to the upside, with six (!) sets of single prints, and the market is trading in the middle of value. The daily has returned to a 5-day balance following the break of the previous day’s high. The short-term value (5-day VPOC) is located at 4419, but more importantly, the medium-term value (20-day) has shifted from 4290 to 4419, indicating acceptance of higher prices.
For tomorrow, the Smashlevel (pivot) is 4419, which represents the short and medium term value. Break and hold above 4419 would target 4441, as well as the unfilled gap at 4451, located in the upper end of the highlighted inside week. Holding below 4419 would target fills of the poor structure towards 4400, as well as the last downside target of 4390. Acceptance below 4390 would be the most bearish outcome, effectively negating the rally observed today.
Going into tomorrow's session, I will observe 4419.
Break and hold above 4419 would target 4441 / 4451
Holding below 4419 would target 4400 / 4390
Additionally, pay attention to the following VIX levels: 14.46 and 13.04. These levels can provide confirmation of strength or weakness.
Break and hold above 4451 with VIX below 13.04 would confirm strength.
Break and hold below 4390 with VIX above 14.46 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.