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ES #F Supply but strong close?
The daily chart above shows our SUPPLY and DEMAND Dashboard and BXB (Bar by Bar) Signals using data from the NYSE.
Friday’s trading did not exactly bring the clarity we hoped for to assess future direction of the market, but there may be some important clues.
Friday the ES lost 4.00-points to close at 2784.50 after an initial drop to a low of 2765.50. With the decent amount of Supply, we expected a deeper pullback. The strong close and the fact that Supply weakened for the majority of the session, after initial strong Supply in the opening hour or so, suggests that buyers absorbed the strong Supply to close 19-points above the low. Supply is still dominating on a 3-day basis, so caution would be in order.
Support to the down side will come in at 2772.25 and 2756.00 if weakness for the near term continues. Resistance to the upside is at 2796.00 and 2807.25. Price needs to close above the 2796.00 level for near term weakness to subside.
The Dashboards on the chart above used the Supply and Demand data for the total NYSE market. If we assess the daily chart with only data for the ES continuous contract, shown below, we notice an interesting anomaly. Demand was dominating on Friday (although the reading was not strong), despite the fact that the ES closed down 4.00-points. Volatility also decreased, a bullish sign. This could mean that the market is getting ready for another move up?
Daily Signals June the 15th
The Supply and Demand Reading (1st row) came it -3.1 with Supply dominating the trading session.
Supply and Demand Direction (3nd row) was to the downside (red down triangle), indicating upwards direction, with substantial strength.
Average Supply and Demand Volatility (4th row) is above 100% which is a bearish sign. The change in average Volatility from the previous day was negative 24 (Supply strengthened) as shown on the right of Sup/Dem Dashboard.
We had 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 45 (Supply strengthened) shown on the right of BXB Dashboard.
The overall NY Stock market traded Higher for the day (blue up triangle in 3rd row).
59% of stocks (4th row) traded above there VWAP (Volume Weighted Average Price) compared to the previous day’s 52%, a positive sign for the markets.
We are neutral to bullish as to the near-term direction, and bullish on the longer term. We need to break the 2796.00 level to establish a solid bullish foundation again for the near term.
The 3-Day and Weekly charts still show Supply dominating. If we have an up day on Monday, the near term picture can turn bullish again.
We took two opportunities 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. Notice how the gap to the down side at the opening of the regular trading session was filled nearly to the tick later in the session.
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).
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