Week of 11/12 for SPX SPY ES
Reminder the daily plans will have levels in between and weekly levels may be slightly modified each day depending on context and prior day’s price action.
After Thursday’s outside day down, ES found itself at the bottom of its 5-day balance (call it 4358-4407). In Thursday’s post I said,
“If sellers fail to get traction into the gap below then it could be seen as a failure and a sign for new initiative buyers to finally buy a meaningful dip. This, in theory, COULD lead to a significant retrace.”
In the morning (seen below) I pointed out that “significant” could mean the ENTIRE move (which would be an outside day up).
Early Asia trading looked below Thursday’s low and found no initiative sellers, and thus short covering and responsive buying commenced. This was one of our long setups and ES rallied 20 points to our first major decision spot of 4375. The Euros then took our short setup off 4375 and sent price right back down to Thursday’s low. Once again, initiative selling was nowhere to be found. A slight higher low was put in, and again short covering and responsive buying was once again seen. This was the same long setup that Asia took but contextually was now a much stronger. When the higher low was made off the 4375 fail this caused us to upgrade all long setups and downgrade all short setups for the day. This is a great example of how we must be nimble and objective in our views of price action.
The last line for sellers was 4385 and was defended early. I took this short as it was the setup that was presented to me at the time and collected 15 points. If I had NOT downgraded our short setups, I would not have been so quick to take profits (7.5 points for core twice). Significant absorption was seen by buyers just above our 4367.5 level from Thursday night’s post. I believe this was both covering AND initiative buying. I’ve said before that large ES participants are very opportunistic. Sensing the entire week’s 4385 sellers to be in trouble, aggressive buying came in following the absorption and a massive squeeze ensued.
Into the close we came to a major decision point. While I don’t particularly think the Moody’s news is super important on its own, if it triggers a technical breakdown then sellers may have a chance this week. We will of course be fully prepared for both bullish and bearish scenarios between the weekly and daily plans.