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Assessments / Blog
ES #F Supply and filling the gap
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 concluded that “We still believe the market will go higher in the following 4 weeks till about middle of June according to our assessment of our proprietary pattern model, but more short term weakness is a possibility, before another substantial move higher”. We also caution that we are in Selling pressure territory and pointed out that it is a well-known fact that nearly all gaps get filled in the S&P 500 over time. Yesterday during regular trading the ES closed down 6.75-points, with mostly overall Supply readings and signals. At the time of this writing the ES traded to a low of 2711, filling the gap of 15.75-points.
Daily Signals May the 22nd
The Supply and Demand Reading (1st row) came it at -2.8 with Supply 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) was below 100% and is bullish, but nearing the bearish level at 100%. The change in average Volatility from the previous day was negative 21 (Supply strengthening) as shown on the right of Sup/Dem Dashboard.
We had a sell 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 -108 (Supply strengthened) shown on the right of BXB Dashboard.
The NY Stock market traded Lower for the day (maroon down triangle in 3rd row).
37% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 56%, a negative sign for the markets.
In short Supply dominated which resulted in a 6.75-points down move during the regular trading session. In after-hours trading a further 15.25-point drop occurred, the gap to the down side was filled at a low of 2711. This 2711 level will naturally be a resistance level. Further resistance to the down side identified come in at 2708.75 and 2700.50.
We still believe the market will go higher in the following 4 weeks till about middle of June according to our assessment of our proprietary pattern model, but more short term weakness is a possibility, before another substantial move higher. Our targets to the upside are 2741.25, 2756.50, 2789 and 2802. The first target was met Yesterday, after which price reversed.
We are in Selling pressure territory so some more weakness is a possibility. Volatility has picked up.
We were cautious to take long entries Yesterday and took one short opportunity during the last trading session on the 26-minute chart below. Entries and exits are shown with arrows:
Strategy is simple, enter when 2 Dashboards align and exit when two opposite triangles on BXB Dashboard appears, shown with arrows on the chart. We do not take trades when the of Supply and Demand Sentiment tool is at or near extremes (over-bought/sold) in the same direction of the possible trade. 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).
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