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Smash ES Plan | December 5, 2022
Lower high and a lower low on Friday with value overlapping lower. Daily is back to a 2 day balance with excess on both extremes, meaning two-sided activity can be expected. Nimble until resolved.
Recap & Plan
We had a pretty slow upward grind in Friday’s ON session prior to NFP, where we tested the resistance area and Smashlevel 4084 and found selling activity. That area was important for buyers to clear for continued upward pressure (and still is), as discussed. The high of the full session ended up being 4084.50. We got a sell-off on the NFP data that took us all the way down to 4007, a familiar level from the previous Weekly Outlook. The low of the full session ended up being 4006.75, where we could see an exhaustive low on the Footprint. I published a brief recap of Friday’s session on both Twitter and Substack for reference.
RTH session opened right at our last downside target for the session 4028. For new followers, the yellow levels are the targets that my focus is on intraday. The white levels are simply references from my chart that are outside of my intraday targets. These white levels may not always be visible on the chart, so I have them listed for reference. As noted in the Weekly Outlook published yesterday, the main theme of last week was sellers inability to gain any downside traction, meaning all liquidation breaks did not find further selling interest and rather gave buyers better prices to get in. With that said, opening at the last intraday downside target 4028 was not a location where you wanted to initiate any shorts. The middle distribution from 11/30 was highlighted in Friday’s plan as an area that will decide a lot short-term and a break and hold below was what sellers wanted to see and as long as that didn’t happen, chasing shorts was extremely risky due to all targets being achieved. We had an initial battle within that middle distribution which buyers emerged victorious from when we got a range extension to the upside in C-period. Buyers were in control of Friday’s auction and we actually once again tested Smashlevel 4084 in L-period, which provided another rejection, meaning there should be liquidity/stops above. Note Thursday’s delta profile, we have plenty of aggressive selling below that 4084 level, meaning recent sellers don’t want to see a break and hold above. 4084 is the weekly level to observe and note how we have 3 daily closes around that area.
We end up with a lower high and lower low on Friday, with value overlapping lower. Daily is in a 2 day balance with excess on both extremes, which one will get tagged first is important to observe. Buyers main objective is to break and hold above 4084, which would target the 2 day balance high excess. Sellers main objective is to target the 2 day balance low excess and continue the pattern of lower highs and lower lows. We can’t forget about the poor structure we left from the 11/30 trend day, which will be a target if sellers can manage to break and hold below that downside magnet 4033, which is what is holding up this recent breakout.
Weekly is one time framing up which ends at 3941.25, where we have very poor/weak structure. Monthly is in a 3 month balance. Some may have it as one time framing up, but for me personally it was back to a 3 month balance when November ended OTFD, meaning I need to see a break of this 3 month balance range to call it OTFU/D. Obviously, there is no right or wrong on this subject.
Additional two levels for VIX to observe for tomorrow; 19.96 and 18.16. They can be used to gauge any moves outside of the intraday (yellow) targets, meaning if 4120 breaks, holding < 18.16 can serve as a confirmation of strength and if 4033 breaks, holding > 19.96 can serve as a confirmation of weakness. Lack of confirmation can serve as a warning to chase. Context always.
Disclaimer: Futures and options trading involve high risks with the potential for substantial losses. The information contained in this communication is for informational purposes only and does not constitute a trade recommendation and should not be construed as such. The reader bears responsibility for any investment decisions and should seek the advice of a qualified securities professional before making any investments. Owners/authors of this newsletter are not certified as registered financial professionals or investment advisers.
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