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ES #F Down and Up again
We concluded our previous assessment with “All signals and readings are bearish. The key for today is to see how much Supply is left and the intensity of the follow through to the down side will be an important factor.” and the market responded at the opening of Yesterday trading session as expected, with a 32.25-points down move. This down move was short lived however, as at about 11h40 (ET), Supply diminished and the market turned around with a 40.25-point move up. Volatility at its best.
Price closed above the Mean (Regression) with still a little Selling Pressure Yesterday. Supply started to diminish after the opening drive, with a substantial move up to close at 2631.75, a net gain of 4.25-points for the day’s regular trading session. The last upswing was completed and signalled No demand, paving the way for the current down swing. The current down wave (still in progress) has moved 91-points on 4-million contracts and compared to the previous down wave, which moved 107.25-points on 7.8-million contracts, it appears as an easy move to the down side. However, the strong close of Yesterday’s candle near the high, looks like a down thrust and potential spring, which is a reversal pattern.
The Supply and Demand Reading (1st row) was -1.7 Yesterday which indicates Supply was dominating.
Supply and Demand Direction (3nd row) was to the downside (maroon down triangle), indicating downwards direction, with No substantial strength.
Average Supply and Demand Volatility (4th row) is above 100% and is bearish. The change in average Volatility from the previous day was positive 8 (bullish) as shown on the right of Sup/Dem Dashboard.
We have an unbalanced market warning signal on the signals board (1st row).
Daily Volatility direction (2nd row) was Down (maroon down triangle). The change in daily Volatility from the previous day was negative -23 (bearish) shown on the right of BXB Dashboard.
The NY Stock market traded Up for the day (blue up triangle in 3rd row).
55% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 40%, a positive sign for the markets.
In short we saw Supply dominating at the opening of the regular trading session Yesterday, which turn around with a 40.25 up move, putting the market in a spring position. Price closed above the Mean (Regression) and is only just in Selling pressure territory. We have some mixed signals and a warning signal. The key for today is still to see how much Supply is left and if there will be follow through to the up side. A realistic possibility exists that the 2611.25 area will be tested, as is characteristic of spring patterns, before continuing the upward reversal path.
Resistance to the up side is at 2658.50.
We need follow through to the upside and to move out of Selling pressure territory for the spring reversal to materialise. This will probably only happen after a test of a support area to the down side. If the market trade down in the short to medium term, the line in the sand for the bulls will be the February 9th low at 2529. A close below this level will Technically damage the bull market.
There were 1 clear opportunity during the trading session Yesterday on the 26-minute chart below:
Strategy is simple, enter when 2 Dashboards align and exit when two opposite triangles on BXB Dashboard appears. Entry was short (magenta down arrow) with a nice profit. No other entries were taken, because the Dashboards did not align (long signals with majority Supply readings and short signals where there was Buying pressure on the Volume Oscillator).
The volatility in the market is clearly visible as illustrated by the large price swings on the Intraday chart.
The last sub window on the chart shows the Greed / Fear sentiment measurements of Supply and Demand. Similar to an Oversold / Overbought situation (but without using price related formulas). The market reversed after Fear reached a peak around 11h40 (ET).
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