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ES Daily Plan | November 14, 2023
Contextually, there haven't been significant changes following today's session. The primary focus remains on closely monitoring for continuation or the lack thereof above the October high of 4423.
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.
The overnight (ON) session immediately started filling Friday's structure after failing to hold above the Smashlevel of 4423, which proved to be pivotal throughout today’s session. The poor structure was only partially filled as sellers failed to gain traction within the prior 5-day balance area, leading to a reversal. The 4423 pivot was revisited during the European session, where sellers were active, stalling the upside momentum.
The RTH session opened below both 4423 and the Monthly Extreme High of 4418. Notably, the VIX was trading above its resistance level of 14.82. In scenarios where the VIX has breached its resistance level before the RTH open, I typically exercise caution when chasing longs. Initiating longs becomes a much safer option if the VIX returns back below its resistance. Immediate weakness was observed in the early stages of RTH; however, similar to the ON session, the downside momentum stalled at the prior 5-day balance high. When 4423 was revisited during the RTH, the trading activity was interesting from an order flow perspective. Aggressive sellers started to hit the bid, but failed to generate significant follow-through to the downside (absorption). During this battle, the VIX returned back below its resistance level of 14.82, and aggressive buyers started to step in after the absorption. I will provide a visual of this sequence on Substack. The PM session was largely uneventful, marked by market consolidation above 4423. The I-period offered an attractive opportunity for the patient trader with the afternoon pullback low, leaning against 4423 and the D-period single prints.
Contextually, there haven't been significant changes following today's session. The primary focus remains on closely monitoring for continuation (Acceptance) or the lack thereof (Rejection) above the October high of 4423.
In the case of acceptance, the primary upside target is the unfilled daily gap at 4446, followed by the highlighted resistance area ranging from 4465 to 4475. Conversely, a rejection opens the door for fills of Friday’s breakout structure, which was partially filled today, towards the support area from 4400 to 4390—a crucial area for buyers to maintain.
The CPI data is scheduled for release tomorrow, and as usual, it is expected to bring volatility to the market. Stay nimble.
For tomorrow, the Smashlevel (Pivot) is 4423, which represents the prior 5-week balance high as well as the October high. Holding above 4423 would target the unfilled daily gap at 4446. Break and hold above 4446 would target the resistance area from 4465 to the final upside target of 4475, which represents the prior Weekly Extreme High. Break and hold below 4423 would target fills of Friday’s poor structure towards the support area from 4400 to the final downside target of 4390. In the case of continued weakness, the target is a full traverse of the 5D composite value area towards 4375.
Levels of Interest
Going into tomorrow's session, I will observe 4423.
Holding above 4423 would target 4446 / 4465 / 4475
Break and hold below 4423 would target 4400 / 4390
Additionally, pay attention to the following VIX levels: 15.44 and 14.08. These levels can provide confirmation of strength or weakness.
Break and hold above 4475 with VIX below 14.08 would confirm strength.
Break and hold below 4390 with VIX above 15.44 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.