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Assessments / Blog
ES #F Supply increased, but no new low?
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 closing the gap traded lower again closing 6.75-points down at 2720.25. Supply weakened towards the end of the session. The daily Supply increased compared to the previous day, but price did not weaken as much, as would be expected from a strong Supply reading of -5.1. This may be dye to more Absorption taking place. A break above 2741.75 is needed with enough Demand to propel the market higher.
Daily Signals May the 25th
The Supply and Demand Reading (1st row) came it at -5.1 with Supply still dominating and strengthened compared to the previous day.
Supply and Demand Direction (3nd row) was to the downside (red down triangle), indicating downwards direction, with substantial strength.
Average Supply and Demand Volatility (4th row) was above 100% and is bearish. The change in average Volatility from the previous day was negative 14 (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 36 (Supply strengthened) shown on the right of BXB Dashboard.
The overall NY Stock market traded Lower for the day (maroon down triangle in 3rd row).
52% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 62%, a negative sign for the markets.
Although Supply dominated the down move was only 6.75-points, not as much as would be expected from the strong readings and signals. It looks like the market is still under an absorption phase and some more sideways price action is possible. 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 3 to 5 weeks, 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, 2759.50 and 2802.
We are still in Selling pressure territory and Demand needs to dominate to get above the 2741.75 level.
The sideways price action from May the 14th to date (range between 2700.50 and 2741.75) is acting as a spring winding up. The longer it continues the more “winding is taking place” and when released the more powerful the reaction will be. Expect a powerful reaction when it breaks out of this range.
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 towards the end of the session just after a new session low was made, driving price higher.
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