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Assessments / Blog


2018-05-16
ES #F Pullback


The daily chart above shows our SUPPLY and DEMAND Dashboard and BXB (Bar by Bar) Signals.

Readings are based on Supply and Demand and Volume internal data of the total market. It is updated in real time during the regular trading session of the NY Stock exchange and does NOT take into account any price indicators or mathematical formulas using price. We do however show the cumulative price change for the trading session and in some instances assess price movement’s relationship to Supply and Demand. It is therefore fair to say that the readings and signals are independent from other popular price indicators and others shown on the chart. The readings are an independent assessment of the one and only measureable fundamental market mover: SUPPLY and DEMAND. It does not matter if price is influenced by a geopolitical event, seasonality, fundamental economic data releases or sentiment driven news, etc. It all reflects in Supply and Demand, the “footprints” of the “Big Boys” or “Smart Money”.

In our last assessment we warned about a possible pullback. Yesterday the market responded with a 22.00-point decline. The Supply/Demand Sentiment tool broke through the zero level with Supply dominating the whole regular trading session. We can see that Demand reached a peak on 4 May 2018 and slowly subsided since then, showing a Divergence until it broke through the zero level (Supply starting to dominate). It is difficult to say where the pullback will end before the bullish path continue again. The 2700.50, 2692.00 and 2682.25 levels should be watched for a possible bounce from here to the upside.

Daily Signals May the 15th

Dashboard:

The Supply and Demand Reading (1st row) was -2.8 Yesterday which indicates Supply had the upper hand.

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 now above 100% and is bearish. The change in average Volatility from the previous day was negative 37 (bearish) as shown on the right of Sup/Dem Dashboard.

BXB Signals:

We have no 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 60 (bearish) shown on the right of BXB Dashboard.

The NY Stock market traded Higher for the day (blue up triangle in 3rd row).

54% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 39%, a positive sign for the markets.

In short Supply overcame Demand which resulted in a 22.00-point down move Yesterday. The Divergence showed on the Supply/Demand Sentiment tool played out when Supply overcame demand. We expect the down move to end at 2700.50 or 2692.00 or 2682.25, before the market bounce and continue the upward path again.

Caution:

We expect the bounce to be sudden and ferocious, typically like the V-shaped bottom formations we saw so often the last 2 years, so be careful.

Resistance to the up side is at 2718.50 and 2744. A break above this levels can test the 2807.25 level.

Intraday

We took two opportunities 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. Entries and exits are shown with arrows on the chart.

The last sub window on the chart shows the Greed / Fear sentiment measurements of Supply and Demand Sentiment tool. Similar to an Oversold / Overbought situation (but without using price related formulas). Notice how Supply stepped in at the beginning of the session, then subsided a bit, but was dominant through the session.

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The information delivered here is for educational purposes only and is not intended to be a recommendation to purchase or sell any of the stocks, futures or other securities referenced. All references are for illustrative purposes only and are not considered endorsed or recommended for purchase or sale by MC Trading.

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