Monday's Prep

In the interest of avoiding the long weekend "hangover" effect when the bell sounds the open on Monday, here is the current state of the ES:

 

 

 

 

 

3/24 In Context

As you can see, there is a case for going up and a case for going down.  Starting with the rally continuation scenario:

1. Mainly weak and day-timeframe money has driven the market up off the 1800 early Feb lows.  Currently, the market is up over 200 points, with no notable pullback yet manifested.  While buyers are weak, there are no sellers.

2. Thursday attempted to move down, opening with a 10pt downgap.  Unable to take out the 3/17 weak low, it churned sideways, attracting little sell interest.  This is an important observation - price is an advertisement mechanism, it flashes opportunity.  Time spent at price "regulates" that opportunity, that is it shows us if it is fair or unfair.  The fairer price is, the more TPOs will accumulate at that price, with the fairest price being the widest closest to the center of the extremes (high and low).  The less fair (expensive or cheap) price is perceived, the less time the market will stay there.  Consider the single prints in A period as a demonstration of this principle: those price were considered low, which we can easily see in retrospect.  The market did not spent hardly any time at those prices, they were rejected as "fair".

3. Weak money is responsible for selling the market.  Consider the piss-poor 3/22 high, the 3/23 suspect high, and value/prominent poc that didn't move down with price also on 3/23.

However: the weak A period low and the BCG weak lows, together with low volume and sluggish/grind tempo reveal who was buying the market: the short and day-timeframe money.  In other words, traders who are on the weak hands end of the spectrum. 

4. Despite this, the market managed to rally most of the day, even one-timeframing into the close.  This tells us shorts were being forced out after the market failed to take out the low in the G period liquidation.

5. The market closed the gap at the end of the day, accepting into yesterday's range and leaving a buy spike.

Now, let's consider the opposite scenario:

1.  While there are no sellers, that does not mean there won't be any in the future.

2.  Psychologically, fear is much more intense than greed.  Should stronger-hands sellers enter the market, the weak hands will easily be run over, and the liquidation break will be intense.

3. There is evidence of weak hands buying the market all the way down to the 1800 lows.  It is also likely that should that price area be revisited again, it will not hold like it has the previous visits.  It has simply been hit too many times at this point, the odds favor it finally giving way.

4. Thursday's profile shows a weak low and a point of control that did not move up with price.  Traders are mostly long at poor prices.


For now, let's look at what's closest to the current market.  References below the market are detailed in the 4/21 post.

The first reference I am looking at is the spike base.  If Monday opens above it and continues to accept in 3/23 range, it is a support level look at getting long at.  After that, there is a 2033.25 prominent point of control, and then the piss poor high from which this sluggish break originated from.

Should the spike base not hold, look at the weak A period low discussed above, ant the references below it discussed in the 4/21 post.