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ES #F Small gain on diminishing Supply
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”.
The ES opened up lower at the start of the regular trading session Yesterday (leaving a gap to the upside) and after an initial run down to a low of 2704.50 it slowly gained momentum which accelerated towards the last part of the trading session to a high of 2733.50 and closing 4-points up at 2730.00, closing the gap. On the Supply and Demand Sentiment tool shown on the Intraday chart, the diminishing Supply since the low is clearly visible. There is still Supply but it weakened from the previous day. On a 3-day basis Demand still have the upper hand. A break above 2744.00 is probably needed with enough Demand to propel the market higher.
Daily Signals May the 23rd
The Supply and Demand Reading (1st row) came it at -1.7 with Supply still dominating, but weakened compared to the previous day.
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. The change in average Volatility from the previous day was positive 5 (Supply weakening) as shown on the right of Sup/Dem Dashboard.
We had an unbalanced market warning signal on the signals board (1st row).
Daily Volatility direction (2nd row) was Up (blue up triangle). The change in daily Volatility from the previous day was positive 39 (Supply weakened) shown on the right of BXB Dashboard.
The NY Stock market traded Higher for the day (blue up triangle in 3rd row).
64% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 32%, a positive sign for the markets.
Overall Supply is clearly subsiding. We need to move out of the Supply zone (Supply and Demand Sentiment tool) and out of Selling territory (Simplified Volume tool) to get a substantial move higher. On a 3-day basis Demand still has the upper hand, and our assessment is that the markets should resume the upward path soon, if Demand gets the upper hand on a Daily basis.
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 2744, 2756.50, 2789 and 2802.
We are still in Selling pressure territory and Demand needs to dominate to get above the 2744 level.
We 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 below 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 weakened from the low of the session, driving price higher.