Hot CPI/PPI, miss Retail Sales be damned, we going to the moon Alice!
Monday is a holiday for RTH.
With Friday being a tight consolidation, we want to observe if buyers can indeed maintain the trend established from Thursday. Value was moved higher in the buyers favor which makes it all more important that they continue and establish acceptance above the major pivot 6108-12.
We have unfinished business at the current non-adjusted ATH and balance top. A breakout that is accepted can see 6173-83, 6186.50, and the 50% weekly extreme 6200-6210. If we head lower first to either single prints or the major pivot 6108-12 and bid, take some off around 6130 and leave runners if able for higher.
Bullish above 6108 – last WK VAH.
Bearish if below 6073-68, PPI Lows
Weakness can begin to show below 6108 making a trip down to 6088, last week’s POC. Further weakness will see a move to 6068-73 and PPI low. Last week’s VAL is 6051. Seller’s main goal will be the lower balance LVN and test of last week’s low 6011.50
Since the DeepSeek AI Drop, a 3 WK Profile POC is found at ~6088.
ES Live Chart (bookmark it): https://www.tradingview.com/chart/f8EEzTyy/
Now for some larger views. We have been in a multi week/month balance. I have adjusted this to RTH 5950-6163. When you have a balance range form, the breakout, or breakdown, measured move is equal in size. So, if a breakout is sustained, which may take a few weeks to confirm, the upside targets would be 50% (6272.25) and 100% (6383.75) extensions. The January and February expected high that the options market priced in for forward implied risk at the close of January 31st are roughly the same at 6360. On the reverse, a failed breakout would then target minimum the balance halfback – 6057. Apply balance rules.
At the moment, all the checkboxes are in the bulls column. 1) Above gamma flip, 2) above a rising 5dma, 3) new weekly ATH close, 4) breadth relatively positive although spotty with rotation afoot, 5) above a rising YTD and MTD Vwap.
Seasonality for February is usually bearish the 2nd half with a turn down roughly the 12th trading day (Feb 19th). This week is also OPEX which would align with that. Now is that 100% a cause for concern, no, as we follow price above all else. So no one should blindly short until OTFU at least ends. No need to catch a top as there would be plenty left on the bone once risk is defined. However, one must remain vigilant and protect capital at all cost. We can totally grind a slow wall of worry towards 6383. We can also make a failed breakout of balance causing, what could be, a very nasty Wyckoff distribution and liquidate to the bottom of balance 200+ pts. Seasonality would see us round out a low first or 2nd week of March.
For clues, you want to watch NQ. Can it take out the Dec FOMC Single Print, highs, and that mini consolidation from the contract roll? If it can hold and accept higher then that will allow ES to grind up. We also need to be mindful of RTY. 2330 and change is local resistance, not to mention it’s still about 7.5% from ATH. Smalls will need to jump on the ATH train if we want to power on.
In addition, watch HYG/SPY. Is smart money (HYG) diverging from Dumb Money (SPY)?
I believe we need to remain bias neutral on higher timeframes, but lean bullish until sellers actually do something worthy. They are out there as you saw from the previous heavy liquidations – 2 and 3 Friday’s ago, CPI, DeepSeek, Dec FOMC. Regardless if we test lower first or breakout of balance. Those lower ranges 6108-6112, 6114-20/23 becomes very important in the near term and especially 5990-6012 if seasonality plays out.