ES Daily Plan | May 14, 2024
Tomorrow, we have PPI and Powell on deck, serving as potential catalysts for this holding pattern. The levels of interest and targets remain unchanged.
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.
Visual Representation
Contextual Analysis
We are starting the week quietly, which is not surprising given the several economic events scheduled for this week, starting with the PPI report tomorrow. Buyers regained control of the 5250 level during the overnight session, pushing the market to test the initial upside target of 5262, aligning precisely with the opening level of the RTH session. The VIX showed divergence by remaining above its resistance level of 13.28 throughout the session. The 5262 level saw immediate selling activity in the A-period, resulting in a return to the 5250 level, which ended up being the most traded price by volume today.
With buyers working their way up to Friday’s high but unable to breach it, and sellers coming within two ticks of Friday’s low, we ended up with an inside day, implying short-term balance. Responsive two-sided activity is expected within today's range, while a directional move requires acceptance beyond its extremes—both of which are weak. The key question is whether buyers will be able to shift the short-term value (5D VPOC) higher, or if the market will return to 5212. Tomorrow, we have PPI and Powell on deck, serving as potential catalysts for this holding pattern. The levels of interest and targets remain unchanged.
For tomorrow, the Smashlevel (Pivot) is 5250, which saw notable order flow activity during Friday’s closing session and also marked today’s afternoon rally high. Break and hold above 5250 would target the upper end of today’s session at 5262. Acceptance above 5262, signaling strength, would then target the final upside target of 5285, marking the J-period breakdown single prints from April 4th. Holding below 5250 would target Thursday’s afternoon pullback low at 5227, aligning with the high of the prior 3-day balance. Acceptance below 5227 would then target the short-term value (5D VPOC) at 5213, acting as a downside magnet in the absence of an upside continuation.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5250.
Holding above 5250 would target 5262 / 5285
Break and hold below 5250 would target 5227 / 5213
Additionally, pay attention to the following VIX levels: 14.20 and 13.02. These levels can provide confirmation of strength or weakness.
Break and hold above 5285 with VIX below 13.02 would confirm strength.
Break and hold below 5213 with VIX above 14.20 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.
Meanwhile SPX is approaching ATH in advance.
Thanks! Let the party begin!