TUES - 12-14-2010 - (DAY SESSION PART 2) SUMMARY - After the 1:15 Fed announcement price bounced around the key 1240 resistance area for 15 minutes, twice failing to move to new highs. A failure to move above intra-day highs (also resistance high from yesterday) was followed by a counter trend price/volume sell set up at 1:30 at 1239.75 which provided small gains when price moved to test the 1236 support area as well as a new intra-day down bias (accompanied by a new volume extreme), for as long as price remained below 1240. The pullback to the 1240 area at 2:00 with volume confirmation set up another sell opportunity to new swing lows in the 1236 area and strong price volume follow through lower signaled a move to overnight lows at 1233.75 as well. The sell side provided nice trading opportunities this afternoon after price failed to move higher after the FED announcement in conjunction with a big picture focus on the1240 resistance area.
WED - 12-15-2010 (OVERNIGHT-OPEN) MACRO â On the daily charts, the ES has broken out of the 1200-1050 bracket on the way to the 1280 area. Currently price is in an uptrend with big picture 1220 pullback to swing support. 1230 is first support. If 1230 is re-entered, look for a move to 1220 based on the 1230-1220 balance area. OPEN â Overnight price worked its way to the low of the 1240-1230 balance area and bounced pretty strongly back up to 1235. There is clearly responsive buying as price approaches 1230, much in the same way there is selling up near 1240. If price is to make it back to 1240 it needs to clear 1237 resistance, and if its going to work its way down to 1220 its likely to find a pause in the 1233-1230 area, so early trading may ofter limited follow through either way. The trend from yesterday is down until 1237 is taken out to the upside, and price volume before the open is pointing in a conflicted up direction with a bounce from the 1230 area. Therefore, if the current up bias can't follow thru past 1237 early, look for signs to get back with the downtrend (C2 sell, or a shift to a C1 price/volume pullback sell, etc), and see if price can follow through to new overnight lows below 1230. Price is likely pulling back to the 1220 area in the big picture, but it has to get through 1230 to get there and there seems to be 1237-1232 consolidation area forming in the short run, but as long as 1237 holds we will maintain a down bias (even if a countertrend long trade sets up first), and have a better idea where things stand after the first hour of trading.
WED - 12-15-2010 - (DAY SESSION PART 1) GAP/FIRST MOVE/FIRST RETRACE - ES continued overnight flow and started in counter trend up fashion with the first price/volume long entry at 8:00 around 1232.50 (and next at the 8:30 open) that took price up to take out 1237.25 overnight highs up to 1238.50 during the first move of the day up. As long as price holds 1235, the bias remains up and look for price to move to 1240-1230 area consolidation highs, and monitor high low swing flow from there to maintain up bias or change bias to down sometime later in the trading session. If 1235 breaks, then price will likely be in chop between 1238-1232, so look for price/volume chop type trades after the high or low of the range is tested, and wait for the trading trend to better align later in the session If it possible a strong break below 1235 will turn the trend immediately down, but will just have to monitor price/volume action at that time if it happens. Chop is more likely to start.
WED - 12-15-2010 - (DAY SESSION PART 2) SUMMARY - From the bounce off the 1240-1230 low overnight, price worked its way up to 1240 as expected. From there price met resistance, moved below 1235 and the intra-day bias turned down. A pause at 1232 was logical, and a pullback to 1235 intra-day swing resistance provided a good sell area for price to move to new intra-day lows and test the 1230 area. When two attempts to move below key 1230 support failed, a classic price/volume counter-trend buy set up developed at 1231 for an expected move back to the 1235 resistance area which resulted in 1235-1230 intra-day chop to end the trading session
THURS - 12-16-2010 (OVERNIGHT-OPEN) MACRO â On the daily charts, the ES has broken out of the 1200-1050 bracket on the way to the 1280 area. Currently price is in an uptrend inside 1240-1230 with big picture 1220 pullback to swing support. 1230 is latest support. If 1230 is re-entered, look for a move to 1220 based on the 1230-1220 balance area. OPEN â Overnight price remains inside 1235-1230 chop that started at the end of yesterday's session. The big picture trend over the last few days is down until 1235 is taken out to the upside. The bias is still for a break of 1230 on the way to 1220, but you never know. If price opens inside 1235-1230 it is in clear chop. You can take price volume trades that develop early with caution (i.e. move to break even quickly) and see if a breakout develops. If not, look for a more powerful breakout later in the trading session.
THURS - 12-16-2010 - (DAY SESSION PART 1) GAP/FIRST MOVE/FIRST RETRACE - Price made a first move higher inside 1235-1230 chop which represented a normal pullback in a downtrend from yesterday. The aggressive first trade of the day was a short around 8:50 near 1231.50 as price and volume were breaking down for a test of overnight/yesterday lows near 1229. The Philly report at 9:00 created some volatility at the key 1230 support area, and price made a first retrace back up to 1232.50, still within an overall down bias from yesterday as long as the 1232 area holds. If 1232 is taken out soon, then we are back in 12356-1230 chop... If 1232 is taken out later, we are likely in a new intra-day bias up from a failure to move below 1230. For now maintain bias down as look to see if 1230 area can be taken out on the path to 1220.
THURS - 12-16-2010 - (DAY SESSION PART 2) SUMMARY - Price made another probe below 1230, and then rebounded sharply above 1232 and even 1235 to set the path back up to the top of the 1240-1230 range. There was a small loss from a sell trade that couldn't break through 1230, and the sharp rebound didn't give much time and/or room to get long early on the way up, but once 1235 was taken out, a push to 1240 was clearly the next stop, so there were ways to profit from long trades during the initial pause in the 1236 area during the first move up, and then again near the end of the session on the second push up to 1240 once 1235 support held. We now watch the top of the 1240-1230 range again.
FRI - 12-17-2010 (OVERNIGHT-OPEN) MACRO â On the daily charts, the ES has broken out of the 1200-1050 bracket on the way to the 1280 area. Currently price is in an uptrend inside 1240-1230 with big picture 1220 pullback to swing support. 1230 is latest support. If 1230 is re-entered, look for a move to 1220 based on the 1230-1220 balance area. If price moves above 1240 area there little resistance overhead on the way to 1280. OPEN â Overnight price is in 1240-1235 chop near the top of 1240-1230 consolidation. Up bias as long as 1235 holds. A slight negative price/volume trade bias is developing coming off the 1240 highs an hour before the open at 1238, but price still has to break below 1235 to turn the overall bias down so be careful with an early 1238 sell. Look for price/volume setups to lead the way during early trading, and the key is to see how intra-day structure forms relative the 1240-1235 chop area.
FRI - 12-17-2010 - (DAY SESSION PART 1) GAP/FIRST MOVE/FIRST RETRACE - Very tight start to today's session. The only setup early was a price/volume sell at around 8:40 at 1237 for a test of the 1235 support lows, and the first move of the day ended up being a very slight 2 point move lower to the 1235 area. This was a logical place for a bounce higher and a long setup developed around 9:15 at 1237.25 for a move to test the 1240-1239 resistance area. Mechanically price is in 1240-1235 chop, and developing intra-day structure is best carried over from yesterday to confirm 1240-1235 chop as well. For now cautiously trade with counter price/volume setups inside chop after a high-low area is reached. The big picture bias remains up as long as price holds 1235, so long trades are best. The longer we stay in chop the more powerful the break will be as we monitor for the mechanical trading trend to realign as the trading session moves on...
FRI - 12-17-2010 - (DAY SESSION PART 2) SUMMARY - Price made another push lower to 1235 just before 10:00, turned higher, and with a big picture 1240-1235 chop view, a long price/volume set up developed around 10:30 at 1237.25 for a push to the 1240 area. With very slow price action , price hovered in the key 1240 resistance area for a long while (no long trades here), and the best trade setup to take was a brief counter trend price/volume sell at 14:27 when price fell below 1240 for a scalp pullback move to 1238 area support. There really wasn't much else to do today as price stayed inside 1240-1235 consolidation for the entire session.