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Smash ES Plan | December 9, 2022
Test of 3940 held and we got a decent squeeze during the initial balance. The two-sided activity continues as we are still trading within the composite high volume node. Still on ESZ22.
Recap & Plan
We had plenty of aggressive selling at the lower end of yesterday’s profile, meaning sellers wanted a fairly quick follow through to the downside, which they got after the immediate rejection off 3940, when the ON session opened. The break of the inside day to the downside ended up lacking continuation, meaning once back within range, the short play was invalidated and the target becomes the other side of the balance area, which was completed before the opening of the RTH session. I’ve highlighted a balance area (blue box) from the ON session which lasted a couple of hours, where Smashlevel 3940 was acting as support. During that sequence NQ was defending that 11549 level, almost the the tick. Once it was taken out, ES started gaining traction to the upside and completed the full traverse of yesterday’s range. This is the second ON session in a row that has taken out the weekly RTH low 3921.50, but these lows remain untested during RTH, meaning that will be a downside target if buyers can’t defend today’s A-period excess.
RTH opened above yesterday’s value area and after trending up for basically the whole ON session, we got an immediate inventory correction. That corrective activity took us down for a test of 3940, which sellers failed to take out despite -7072 delta the first 15 minutes of RTH. Failure to breach 3940, triggered a decent squeeze. Why? Observe the red box with yesterday’s aggressive selling. A break of the inside day to the upside had potential for more short covering, trading above the Weekly Extreme Low 3960, and B/C-period managed to fill the poor structure from 12/6. We carry forward fills of the large A-period excess from that 12/6 session. One interesting sequence was when I-period attempted to make a new high, but stalled 3 ticks shy of the C-period high. RTY hit 1828 (Weekly Extreme Low 1826) during that sequence and we got a reversal with pace. Confluence. Carry forward today’s high as unfinished business.
We end up with a P-shape looking profile after pretty much balancing around that composite high volume node after the initial balance (first hour of RTH). Notice how sellers have been having a hard time gaining downside traction since 3960 was taken out, hence why I always play defense after hitting the weekly extremes early in the week, as discussed after Tuesday’s session. Today, we actually closed back above it. NQ closed above 11549 while RTY closed below 1826. I would continue to keep track of these three levels. Buyers would prefer RTY to climb back above 1826, while sellers want ES and NQ back below 3960/11549. Daily OTFD ended, meaning we are back to a 3 day balance. As mentioned, we are still within the large composite HVN, meaning two-sided activity is expected so stay nimble.
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