ES Wednesday 9-2-15

Good evening to all. Today we gapped down and were unable to close the gap. We ended up in the previous balance area of 1831 to 1950.5. we shall see if we get to the bottom end of this balance area in the near future at 1831 or not. keep in mind that we could likely close today's gap before continuing lower so I am not saying we get there tomorrow or at all, but that there is a likelihood that it could get there. All we do is look at probabilities and then look at price action. Predicting a market is a fool's errand.

Greenies: 1894, 1918.25, 1927.25, 1969.5, 1979, 1995, 2014.25, 2053.25, 2077.75

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I had to scale my y-axis to make the entire profile fit in 1 page so I apologize for the small text. We can see that there is a good buying tail at the low end with the market rallying hard in the last 30 mins or so. Again, the VPOC which was higher became a magnet towards the close and pulled prices towards it. It is interesting to note that the VPOC of 1918 is close to the mid-pt of the day (1919). The market closed pretty close to it at 1915.5. The value was clearly lower today compared to Monday with the inability to close the gap.

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On the split profile we can see how the market kept trying to go up in the C period and could not take out A period high. Then the D period could not take out the C period high and the E period could not take out the D period high. The buyers kept coming in at lower levels but the buying simply exhausted as they moved up in price unable to take out the previous 30 min period highs. This was creating the wedge that I mentioned in the Monday trading notes. Finally when the F period came by and could not take out the E period high, the buyers finally threw in the towel and we had liquidation rest of the day with shorts piling on. There was some respite in the K period but that just seemed to be inventory adjustment with the selling commencing again until the last 30 mins or so when the market got too short and we had some frantic short covering towards the close driving prices back up to the VPOC. This is all very simple stuff as long as we can keep up with it in real time. Today I saw it more as the wedge play than the profile play but the end result is what matters. This also goes to show that no matter the approach, they all usually point at the same thing.

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We shall see how the O/N plays out and come up with a plan in the morning. There are no major economic reports tomorrow.
The O/N inventory is more long than short, but not 100%. Note that the O/N high is 2 ticks shy of YD's high. That is not a coincidence and means that the market was extended far enough and also that it did not find any buyers outside of YD's range. That is the reason the ONH and YD's high are going to be important if we are to close YD's gap and get the single prints from 8/27. Also note that the up gap from 8/26 to 8/27 is not yet filled as well. The market is thin above YD's high and that could likely be the reason why the O/N session did not get there. Below is a chart with these areas marked off with the blue horizontal lines. Good luck to all.

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here is my Roadmap/Plan for ESU15 think we will test 1950

current high is 2 ticks shy of YD's high. we did not have a test of the O/N mid-pt YD. Today's O/N mid-pt is at 1924.5.
What we are seeing right now could likely just be inventory adjustment
Most traders I talk to were buying the open targeting all the singles upto 1966.
this is a lot of single prints and current VPOC is at 1934.25. i would say that this looks good for a bounce
true and that is the mistake a lot make because the O/N inventory was very long but not strong enough to take out YD's high until the very last. this means that the inventory likely was going to be adjusted at the beginning. plus we know that the O/N mid-pt did not get tested YD which meant that there was a 95% chance of it getting tested today. all this pointed to a lower move first before any higher moves. The market first needs to take care of the immediate business at hand i.e. adjusting inventory

Originally posted by jimk

Most traders I talk to were buying the open targeting all the singles upto 1966.
VPOC just shifted to 1932 but there is volume all over from 32 to 35
30 min VPOC at 1930. it has been moved down over time. this could be a sign for lower lows to come
buyers are trying to mount a challenge but they look weak with them buying the bottoms. the low is looking pretty weak right now
having said that, if we somehow get to the open, that could bring in more buyers so continue to be cautious and quick
end of the day stop hunting.... typical! :) have a good evening to all