ES Daily Plan | May 17, 2024
The daily one-time framing up remains intact as buyers continue the pattern of higher highs and higher lows; however, some signs of exhaustion after printing a new ATH.
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
In the previous plan, we discussed the complex outlook for the rest of the week, noting that the market, which is one-time framing up across all time frames, has reached our weekly target (5340). Today’s session served as a great example of the complexity, as price exploration above the Weekly Extreme High of 5340 was rejected in both the overnight and RTH session, despite the ongoing upside momentum. Buyers initially defended the pullback in the RTH session within our key area from 5330 to 5323; however, the range extension to the upside led to the formation of a poor high, trapping buyers and ultimately resulting in a reversal back below 5340. Since this poor high was never retested, we now carry the new ATH forward as unfinished business.
During the afternoon session, trading activity occurred below 5340, with several attempts by sellers to break the 5330-5323 area. They succeeded in doing so during the last 30 minutes, referred to as the M-period. When the M-period establishes a new daily low (or high), we call that a spike. Since the session closed after the M-period, we don’t know whether this closing move away from today’s value area will be accepted or rejected, so we must observe tomorrow. The base of the spike is noteworthy in the short term, especially considering its alignment with the prior ATH. It’s worth noting that the medium-term value (20D VPOC) has shifted higher from 5050 to 5245, where the short-term value (5D VPOC) is also located. This high volume node will be important moving forward.
The daily one-time framing up remains intact as buyers continue the pattern of higher highs and higher lows; however, some signs of exhaustion after printing a new ATH, which resulted in the formation of a poor high—carry forward. The key area between 5330 and 5323 remains of short-term interest following today’s closing weakness. Buyers aim to reject the closing move away from value, targeting an upside continuation and a cleanup of today’s high. Failure to do so would open the door for structural fills of Wednesday’s session. I've included a volume profile of the last two sessions on the chart, along with a couple of scenarios.
For tomorrow, the Smashlevel (Pivot) is 5330/5323, representing the spike bases from the two recent sessions. Break and hold above 5330, signaling strength, would target the Weekly Extreme High of 5340, as well as the final upside target of 5355, effectively cleaning up today’s poor high. Holding below 5323 would target structural fills toward 5308, as well as the final downside target of 5291. In the case of continued weakness, the unfilled gap is located at 5274.25.
Levels of Interest
Going into tomorrow's session, I will closely observe the behavior around 5330/5323.
Break and hold above 5330 would target 5340 / 5355
Holding below 5323 would target 5308 / 5291
Additionally, pay attention to the following VIX levels: 12.94 and 11.90. These levels can provide confirmation of strength or weakness.
Break and hold above 5355 with VIX below 11.90 would confirm strength.
Break and hold below 5291 with VIX above 12.94 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.
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Thanks Smash! The part about M -period spike goes into my smash notebook. Thanks again for all your work, learning every day from your newsletter.