Note that this week is contract roll with the June contracts roughly being 50-53pts higher in premium. I will be trading June contracts (ESM) going forward. The ES live chart is flip once TradingView does the roll which is Monday evening. I prefer to keep it non back adjusted as, in my opinion, it’s cleaner and historic levels are important in context with prior events. During these transitions leading up to and shortly after, I will refer to SPX as well for structural awareness. This plan will be in March prices.
We are now in 5 day balance with Thursday providing a look below and fail. Friday was a nice bullish day, just like the prior 2 Friday’s which will note did not end well on the following Monday. However, there is a difference here as Friday took Thursday’s high and the overnight auction Thursday-Friday was a change of character. I would have preferred to see a larger washout or capitulation on Thursday’s low with a large excess to make it more solid, but will take what we can get. This is more promising as a swing low compared to the last two Fridays, but bulls have an absolute ton to get through above and have accomplished nothing yet. I still believe there is a larger move to happen with a lot of longs waiting to exit higher unless we get some sudden change in circumstances. I don’t believe this sell was purely about tariffs or a growth scare, and I don’t believe it is over.
ES Live Chart: https://www.tradingview.com/chart/f8EEzTyy/
Friday ended with a spike attempt by the buyers; however did not sustain and instead turned into an excess. Thus, a look above and fail of Friday’s high, or even 5639, is a valid short and would target the single print 5607.75-5610. If continued weakness happens, 5589-92 would be the next target down for sellers where I would take most off. If acceptance below 5589-92, Friday’s low would be next.
If we trade higher with acceptance over Friday’s high, 5666-5676 zone would be the next area which includes the CPI high. This also begins last Friday’s range. Acceptance above 5675 should rotate towards the upper end of 5 day balance 5711.50. If we breakout of balance, I would target 5720-34 which includes Friday 100% extension. There are two gaps above at 5772.50 and 5845.25. The weekly expected high is also up here above 5760.
Above last week’s high, buyers would be in short term control and a continued rally could very well happen. I would be cautious initiating any new shorts until we see that higher low start to form.
The low on Thursday, could indeed be the yearly low if you believe in seasonality and if it is to be real, this “rally” could easily last a few weeks into April. With that said, we need to not be overly bias and continue to go day by day. There are A LOT of thoughts and bias moving about the casino and we need to continue to engage at the edges vs FOMO. If this is the yearly low or pretty close to one, we have plenty of time for new longs. If a lower high is to be believed with new lows in the forecast then there is plenty of time to get into shorts, which is my lean, then no need to be first in line. At this moment, I favor longs as I was mid last week. We just moved quite a bit from the highs marking 10% down in the S&P500. Generally, this is logical to start new swing longs or even DCA into exiting ones that are long term. We just need to see new money enter the floor and as we retrace higher into the 50/618+ fibs, remain one foot out the door.
This week we have OPEX, Futures contract roll, FOMC, Jobless Claims
Weekly Expected move is 132pts