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

Trading plan 4/1/21 Thursday.

We determined that there might be two probable scenarios that may potentially play out today, here’s the post:

Price opened above the POC and is still trading near the high of the day. We will be watching levels of resistance to see if sellers can keep price below that.

Mental prep:

I know my plan and wrote it out the day before. We will follow that and be prepared to be flexible. Looking for areas to sell if we see active sellers able to keep price down.

Affirmations:

I trade my plan and make good decisions.
I can be objective and open to all information.
I carefully pick my entries and trades.

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.

Update 4/1/21 Thursday.

Price has moved from the support area at 3978.50 and is hitting resistance near 4001.00.

We are watching sellers and buyers in this area to see where the momentum is going to be.

My trading plan for the day has me selling rallies but being picky about my entry.

I’m currently short and closely managing the trade.

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.

Trading 4/5/21 Monday.

The market opened up and rallied to new highs. Buyers were clearly in control and sellers did not make a push down until the afternoon, forming a range.

Here’s today’s trade session, next day market analysis will come tomorrow morning.

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.

Trading 4/6/21 Tuesday Recap.

Today the market opened and traded down to test the overnight range (disregarding the selloff just after midnight), and immediately failed to see any follow-through on the sell-side.

Price moved up sharply reaching the POC from yesterday at 6:50 am. We saw buyers significantly control the market and eventually pushed price to 4076.00.

Our plan was to watch for sellers at resistance levels and overextended prices in either direction.

The area near 4074.50 was a key level to take a potential short. Even though buyers drove price up a bit higher, they were not able to sustain those prices and it fell shortly after.

Here is a closer look at the Footprint for that area:

The 2 areas that are shown here are custom profiles and set to show delta. We want to see how buying and selling imbalances change over time and relative to price.

By analyzing this, we can see that as time goes on and price fails to continue rising, there is less buying interest, and sellers come into the market either covering their long position or taking a short position.

By utilizing the custom profile, we can also see a number of traders that were trapped at the high. These are the trades that were market buy orders (lifting the offer) that ended up needing to be sold to exit their position.

Trading Session Video

Here are the two videos from today’s trade. The first one is morning and the second is afternoon.

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.

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Trading Plan 4/7/21 Wednesday.

The daily charts for es mini futures have just hit an important trendline on the top of a channel.

Taking a closer look here are the fib retracement levels if the recent high is the top of the move.

Now let’s look at the delta in relation to price in order to see how the market was behaving at these prices.

This chart shows the delta at each price level, in this case, the data is broken up in groups of 4 ticks. We can look at more aggregated data by increasing the tick size on the custom profile or make it more granular.

The POC of the custom profile is set at 4064.00. For the time we have specified and the price range, the majority of the contracts traded at that price. That bar also has a negative delta of 8,435. The adjacent bars also have mostly negative showing us that sellers were hitting the bid more than buyers were lifting the offer.

While this doesn’t tell us the positions of those traders, it does tell us something important about the mentality of the market.

There were substantially more passive buyers in the market resulting in mass absorption of the aggressive selling. Despite the noticeable imbalance between the sellers and buyers, price still managed to make new highs.

Let’s recap.

What we know so far:

  1. Price is on the top of an uptrend channel.
  2. Price moved up despite there being more active sellers in the market than active buyers.
  3. This move was fueled mainly by passive buyers backing up the smaller group of active buyers.

To find if there is a difference in market behavior between the two highs on Monday and Tuesday, we need to add another custom profile and edit the one we currently have.

We will take the 17 hours before midnight Tuesday, and 15 hours after midnight Tuesday to analyze separately. These numbers are not apples to apples, we are just trying to find the behavior in the order flow.

Disregarding the difference in hours of trading, the most notable differences are:

  1. The POC is 3 points lower today.
  2. The delta is much more negative today (that is expected as today includes the open while we didn’t include the open in yesterday’s data).
  3. The behavior at the price levels between 4068.00 and 4074.00 has changed. Today there is more active selling today in that area as compared to yesterday where that was generally more active buying.

Now let’s ask some questions to see if we can formulate a plan for tomorrow.

Knowing that from yesterday until today, we saw more sellers hitting the bid at prices above 4058.00, what scenarios can we develop from that information?

Potential Scenarios:

  1. A lot of retail traders took short positions in this area with potential stops above the previous high and above the top channel. If so, price movement at and above the stops could fuel a rally. This could then be used as liquidity for large institutions taking large short positions, driving price down (refer to fib levels above).

  2. Mix of Algo trading, scalpers, and retail traders selling into liquidity from big buyers. This is why we saw the large imbalance in favor of the active sellers, yet the price continued to climb. If the market doesn’t necessarily have a bias toward either long or short positions, price may potentially retrace to test past resistance.

And of course, the possibility that the market will do exactly what the market does and we can interpret it then. However, breaking down the data allows us to develop a reasonable trading hypothesis to watch for in real-time as we trade.

We will take a look at the rest of the overnight trade before the open to adjust or polish our plan.

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.

Market Update 4/7 Wednesday.

ES Mini futures opened and rallied to our resistance at 4074.00. Sellers stepped in and drove price down to significant support at 4056.75.

Overall, the bias is toward the aggressive sellers. However, we haven’t seen significant follow-through on the downside as well as continuing to see passive buyers absorb any selling that hits the market.

Price will have a difficult time on the downside IF buyers continue to reload and absorb the selling.

When the market is in a well-defined range, the VWAP can play a bigger role in price action. Price has moved in a more predictable pattern when we add the VWAP to our 5-minute chart.

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.

Post Session Update and Video - 4/7/21 Wednesday

My plan for today was look for areas to sell if we saw two things:

  1. Sellers continue to have a strong presence in the market.
  2. Buyers backing off the bid to allow price to come down.

One of the two things happened today, which was continuing to see aggressive sellers in the market.

However, we saw a huge amount of passive buyers continue to absorb the selling pressure which held price up.

This custom profile is from the open until the close (day session only). We can see that there was a lot of aggressive selling that did have some effect on price, but as soon as it hit any type of support the buyers were eager to take everything they could.

Here’s an example of how much absorption we saw today at key levels:

Some of these absorption orders happened at once, meaning that price came down and as sellers hit the bid, buyers reloaded and price stayed at that level until it reversed or went down 1-2 ticks then reversed.

Here’s a quick example of how these orders can completely stop the direction of the market.

This was an iceberg order that didn’t seem to stop, then some bids were pulled which drove price down a few ticks only to reverse and come back up.

While my plan was to look for short opportunities, I joined the passive buyers with the assumption that sellers would not yet be able to break support.

After that trade I stepped back and reviewed the plan and price action.

Trading session videos.

Morning session.

Closing trade.

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.

Hey Ben, I really appreciate the fact that you recorded and posted your trading session! If you don’t mind, I’ll write a bit of unsolicited feedback on some things I noticed (I watched the first 51 minutes of “Trading session 4/7/21 Wednesday”):

  1. The first trade was a short late after a strong sell off. The overall context up to that point made it more likely that that was a bear leg in a trading range (strong bull leg up earlier in the session and within the prior session’s range) rather than the start of a new bear trend, so selling low is relatively risky. Looking at the few bars leading into that entry: the third to last bear bar on the sell off had a very prominent tail below (bears likely covering and bulls starting to buy more aggressively). The next bar was a very large bear bar which in this context is more likely a sell vacuum test of the lows and sell climax (climax doesn’t necessarily mean it’ll lead to a reversal) rather than a measuring gap into a new bear trend (this bar also had a lot of overlap with the bar before it and bears who sold too low were likely going to use that bar an an opportunity to cover). The follow through bar was a doji (a 1 bar trading range) with only a small bear body which is disappointing follow through for any bears who sold low on the large bear trend bar. There’s a saying, “big up, big down, big confusion” and confusion is a hallmark of a trading range, so it’s better to be looking to buy in the lower portion of the range and sell in the upper portion of the range. Prior to the short entry that was taken, the bar had a prominent tail below that went through the lowest close so any bears who did want to get out of their shorts at breakeven, aside from those who entered at the bottom tick or two, would have been able to do so. Limit order bulls would be looking to buy in the same area which adds to the buying pressure. Those few bars also constituted a higher low micro double bottom (it went down and up with the bear bars followed by the two bull bars and then went down and up on the bar that you entered on) and technically entering above that bull bar is a second entry long which tends to be reasonably high probability in this context. Given the larger trading range and overall bullishness of the market taking a short low in the range is actually a contrarian stance despite the recent sell off. In this sort of context, the market will tend to try to test to at least the top of the sell climax bar.
  2. Notice how when the market did wind up selling off again, it formed large bear trend bars with very poor follow through (large bull trend bars), so again bears and bulls were buying the lows rather than having the bears continuing to be interested in shorting the lows. There were other signs in the price action as it unfolded, but this is becoming another long post so I’ll refrain from commenting too much on other things. Many of the things that I talked about above came into play again.
  3. I think you may be looking at too many things. If it helps you, then keep doing it, but I’ve noticed in my own trading that when I look at too many things it leads to decision fatigue, paralysis by analysis, and cognitive overload which subsequently causes errors in my decision making. I noticed that at times you added more indicators and studies while sitting in a position that was moving against you which may be a sign that you’re looking to confirm a bias towards the position that you’re currently in. This potential bias could also be seen in the way that the trend lines and channels were being drawn.
  4. Speaking of information overload, it’s worth noting that there was buy side absorption before the short that was taken around 34 minutes into the video. This could be seen on the lower portion of the footprint chart around 35:10 (and on the heat map, but it was harder to see), then the buyers stepped up and held the market higher between 4062.75 and 4064.00. I’m guessing you noticed that too which is why you got out of the trade. I think there would be less of a temptation to reverse from long to short and vice versa if less information is considered. It becomes easier to miss things (particularly the overall context when order flow is watched too closely) when too much information is viewed.
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Market Update 4/8/21 Thursday.

ES Mini Futures opened around 4087.00 then traded down to our level at 4074.00. This was a significant resistance level since 4/5/21. Price consolidated in a range between 4056.00 and 4074.00 then finally broke to the upside yesterday after the close.

At 7:00 am, price touched the 4074.00 support level then traded up above 4084.00. It is currently consolidating in a potential bull flag, which could continue to develop if buyers keep bidding to hold price up.

The custom profile shows that the POC for the time period from 9:00 am until now at 4084.00 with price currently trading above that. We have seen a good amount of aggressive selling, but as we have known this entire week, the buyers keep absorbing any selling pressure.

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.

@Trader thanks for taking the time to write this up! I never turn down outside feedback and observations, it’s always a fresh look on things that I may not be seeing or attune to, so thanks very much.

  1. Completely agree on this, not to mention when I made that trade I failed to look at the overall scope of the market. I had tunnel vision looking at the range it was trading in. I thought it would test the bottom part of the range again. The one thing I should have caught on to was the range dissolving as it made higher lows.

In terms of my trading style, it was justified as the risk should have been only 3-4 ticks. However, I broke my rules and let it go further against me. The other thing, looking back through the video, I noticed is the continued pattern of buyers absorbing the sellers. You can see it happen right at the top of the range before it rallied.

  1. I see what you’re talking about, the bull candles are much more fluid and consistent while the bear candles seem to be choppy and forced. Another indication that buying was going to be the path of least resistance.

  2. [quote=“Trader, post:134, topic:3546”]
    I noticed that at times you added more indicators and studies while sitting in a position that was moving against you which may be a sign that you’re looking to confirm a bias towards the position that you’re currently in. This potential bias could also be seen in the way that the trend lines and channels were being drawn.

  • This is great feedback, and something I wasn’t consciously aware of. The fact that I was in trade and adding more indicators or looking at different things. That says to me that I wasn’t confident in the trade or as you mentioned, looking for validation after the fact. That’s a huge red flag in my opinion and something I’ll be making sure I’m aware of.

Looking back, I do think it was an effort to justify an unsure trade or idea. However, I need to be doing that before entering or using that information to validate or foil my idea.

  1. Buy-side absorption has been a common theme this week, well, the only theme. Price has continued to rally even though sellers are outnumbering buyers (on the aggressive side). Looking back I didn’t keep this front of mind, but did notice it after the fact and was able to adjust my plan a bit.

On today’s trade, 4/8/21, I was still biased to the sell-side but did notice when there was buy-side absorption and reversed a few times.

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.

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Market Outlook for 4/9/21 ES Mini.

Today was an interesting day. Tons of choppy trade with small ranges, then a quick rally right before the close. Absorption, aggressive selling, etc, etc. Let’s take a look:

The past few days we were testing resistance at 4074.00. Yesterday we broke that level to the upside and then price came down to test it as support.

As it has been the past few days, sellers outnumbered buyers in terms of the delta but there have been so many buyers backing up the bid that price continues to rise.

Today’s trade showed more buying at the higher prices, this could be attributed to stops being hit as well.

Here is the moment when price touched the 4074.00 level.

Price dipped below that level briefly, with buyers soaking up liquidity and keeping price moving higher.

Right now we are seeing price potentially repeat a pattern where previous resistance turns to support. We will continue to watch for heavy selling absorbed by passive buyers. As it has played out recently, price has continued to move up despite the aggressive selling. Until buyers really have backed off, price may continue to rise no matter how much volume the sellers throw at 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.

Market Update 4/9/21 Friday 8:52 AM Pacific.

Price moved up straight from the open to test the highs and is following an uptrend slope.

We are seeing less passive buying driving price up, which has allowed the market to better respect resistance levels.

Plan is to keep trading ranges while capitalizing on bigger moves when buyers and sellers can’t defend the support/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.

Potential double top if price holds here at 4098.50.

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.

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Market Update 4/9/21 Friday 10:40 AM Pacific.

Price just broke above the 4098.50 level we were watching, appears to be moving toward the all time high at 4102.50.

I exited my short position and am waiting for price to consolidate at a new level to see where buyers and sellers are.

The last leg of this move showed clear direction in delta which is what drove price.

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.

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Market Update 4/9/21 Friday 11:18 AM Pacific.

Price did make new highs but didn’t move high enough to hit any stops that were significant enough to move the market up.

We have held in a range and are creeping up to the highs again with less than 2 hours left in trading.

If buyers can control the market and keep inching price up, we could potentially some nice movement above 4104.00.

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.

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WOW! these are awesome! I had asked a question on a previous message board but this pretty much answered my question. I took a short 9:53 at 4097 and I got beat up as a result. I think I need to really learn the process of passive buying, all I was seeing was heavy short selling volume.

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Market Update 4/11/21 Sunday.

Globex opened and gradually sold off, currently at 4107.00. If we continue to slide down there is resistance at 4102.50, 4098.50 and 4095.00.

If price does not come down below those areas and specifically to 4091.25, there is a potential VPOC at that level.

Price movement has followed a similar pattern on the way up, potentially forming a new wave similar to the prior moves:

Strategy will be watching for buyers to hold price up at resistance levels and getting long. If we see a change in buyer strength we will look for momentum on the downside while respecting support 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.

Glad you find them useful, thank you.

Yes, the passive buying has been interesting to watch lately. I believe on Friday we noticed huge amounts of iceberg orders on the bid side.

I’m curious to see how the trade is tomorrow and if that pattern is going to change.

Fib Levels.

Forgot to mention, fib levels have been followed fairly closely by price lately. @autobahn pointed this out to me last week, thank you!

Market Update 4/12/21 Monday.

Price is creeping back toward the highs as we approach the opening bell. This move may potentially have follow-through if buyers are aggressive from the gate.

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.