Market Analysis for The Week of 12/21
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In last week’s plan we were a bit naughty with the subtitle. The plan was to punish the early Santa front runners and then turn right around and punish the Grinch.
Buyers indeed tested higher (and failed) first to start the week, which is very often bearish when the market is in balance or a downtrend. To say the 6869.75-6885.75 single prints saw a harsh rejection is an understatement. It certainly made for an amazing trade on Monday:
Note how Monday rejected 6872.5 (71.75 on a cash hours basis) and sold off 65 handles on Monday. Monday night was contract roll so you’ll note the large “gap” created on the chart. Note how even the new contract rejected the top of the single prints even with its 60 handle premium (2nd red arrow). That range was firm resistance on both the ESZ and ESH contracts all week until finally cracking on Friday.
My bias started tentatively flipping on Wednesday at the lows. Keep in mind the plan had been to punish Santa and then punish the Grinch. I spotted some forced selling and a willing buyer taking the other side:
Most traders get bullish when price goes up. I get bullish when I see forced or capitulation selling into a low.
Wednesday (and briefly overnight Thursday in the case of ES) put in low of week has rallied 120+ handles thus far (1600 on NQ).
So is Santa coming next week? Do we rally into January?
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