S&P 500 Futures Market Outlook - Trends and Levels ES MES

[Ben_M]

Update from previous post regarding fib retracement:

As mentioned I drew a fib retrace on the last chart knowing that may not be the top. I also correctly the bottom of the fib to represent the low of the recent move:

Some important things to note:

• Now that the price has hit the high trend line and retraced, it is starting to look like a potential bull flag. However, it seems that an aggressive entry is a bit premature. You can see that the potential flag is high up in the trend channel and just started forming.

• Despite hesitation to join the buyers this high in the channel, the buyers are still winning and have not let the market take a strong foothold on the short side.

• High on 1/8 is directly under the 38 fib retrace.

• Any entry should consider order flow and market delta bars.

Ideally the setup or lack there of will start to develop earlier rather than later.

Ideally. But we all know the markets lol.

Trade well!

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Update midnight session

Price came to test the first level of support coming off the highs. It consolidated for 4 hours only to break lower to the 3825 level.

Remember from from, the 3825 level was the high from 1/8 and should be on everyone’s chart as a significant level.

Here is a cleaner chart that shows those recent highs and how they are affecting price action:

Unfortunately, the setup for a buy or sell could potentially look the same shown in the chart.

Yeah, helpful I know! lol.

But there is a trick you can do to see exactly what is moving prices and how buyers and sellers are interacting with each other.

If you have a live data feed, click on the Show/Hide Volume Analysis:

Then go down to your chart (preferably a copy of any drawings you have on it) then go to the bottom and enable “Time Statistics”.

From here, just click on “Enabled” and choose your options and colors.

I’ll go into this with more detail if needed and then how to read the new layout of your chart to watch buyers and sell trade with each other rather than just price movement.

This is the true key to understanding how markets will move before they actually do.

To validate any long or short idea, the market will have to move price above or below the short term trendlines with conviction and strong buying or selling. Some like to wait for it to break then a confirmation bar closing above it.

• The trend is your friend!

Trade well.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

From 1 am to 6 am the market went lower past the previous high of 3825. However, it was rejected at the open with a large one hour bar up of 15 points.

Below is a cleaner chart but I added the Ichimoku Cloud. I like Ichimoku to check trend and validate any hypothesis I have:

With price being able to come down to the 38 and 50 fib retrace, I am inclined to think that price may potentially come down again to test support before breaking up or down.

Again, watching order flow near these areas will be a huge benefit.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Update

The flag is continuing to develop as trading comes to an end today. Taking the same chart and getting more granular with a 5 min chart you can see price action going up and down testing the levels we identified earlier:

With only 79 minutes of trading left, we have to see how price will act coming up to this divergence.

Here’s what I can see if the market doesn’t go sideways and indeed breaks from this pattern:

Watching order flow and momentum on any price movement above or below specified levels.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Watch this level, it could go fast either way.

So far the sellers were not able to keep the price down below that support line:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Update

Higher delta on move above the trend line may potentially indicate less sellers in the market:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Crazy trading today but price responded to key levels of support and resistance.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

After hours trading showed that price was weaker than I expected and sold off at it approached the divergence.

IF this selling continues, I wouldn’t be surprised to see price coming back up to test resistance and potentially sell off.

I’ll be watching Market Delta to watch active buying and selling.

Screen shots will come in the AM!

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Currently the market on the 15 minute charts is hitting resistance from the trend line created from the high on 1/20.

If price can’t go above this but still holds the long term uptrend, price may potentially retrace to the 3825 level before moving further up.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Market Delta on 5 minute bars will provide more information on what buyers and sellers are doing:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

On the 1 minute market delta we see lots of selling:

The other scenario is if lots of selling continues to occur at these higher prices but can’t push it down, then buyers will have won and may have the momentum to keep pushing the price up.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

A new 15 minute bar developed above the trendline which may potentially attract more buyers to come into the market:

I’m seeing heavier selling on the lows of the 1 minute that is NOT pushing price lower.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Sellers still not pushing price down:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

At 10:30 AM Pacific, I noted that it looked like the sellers tried one last time to push the market down and it failed. Note the chart above on the market delta that the red bars were dark red (indicating aggressive selling) yet price did not make any new lows.

From that time to 11:15 the market rallied 4 points followed by an aggressive sell off.

When you take a look at the hourly market delta chart, you can see that heavy selling occurred at 8:00 AM and had a -4,762 delta. However, since then there has not been selling of that amount on the hourly bars.

Currently the 11:00 AM hourly bar has a -2,000 delta. If we don’t see continued selling that pushes the price lower, or even extremely heavy selling that can’t push price lower, there are too many buyers in the market to allow price to move lower.

The same pattern occurred on the previous chart, sellers tried a second time to push it lower and failed.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Overnight trading is bring price down and it appears that the sellers keep over powering the buyers.

Notice in the market delta chart there is consistent selling while price is NOT making higher highs.

On the hourly charts, there is a slight short term down trend coming up to some support. If sellers keep price down we may potentially see price go down to the bottom trend line of the long term uptrend:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Well, we got the direction right but it sold off much faster and harder than expected.

On the 15 minute you can see where price did respect support levels but not for long as sellers took it through those levels.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

After the Fed announcement price was extremely volatile.

On the 1000 tick chart with volume clusters you can see the sellers trying to push the lows even lower without success:

That’s when they give up their position and buyers come in for a quick move up.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Reversed position and got with the sellers as the price did not make higher highs and buyers were exhausted.

Once price bounced off the bottom, I started looking at Market Delta to gauge buying interest at 3770.

As you can see, even though price was moving up there was more selling than buying. On the two bars at 11:27 AM, price retested these highs with significant buying but DID NOT make new highs.

That was a clear indication that sellers were overpowering the buyers driving the price down 7 points.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.

[Ben_M]

Back in on the short side, entry based on order flow.

Price was bouncing off the lows and was moving up “too fast” in my opinion and order flow validated a short trade with no risk.

Joined the ask, filled and immediately moved down.

It’s easier to trade with the trend and you know if you are right or wrong almost immediately.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion. The placement of contingent orders by you or broker, or trading advisor, such as a “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders. Please conduct your own due diligence if Futures are an appropriate instrument for you.