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S & P Market Outlook - Trends and Levels

6/24/2020

As we were watching that wedge pattern form on the last post, we said there’s a point where it will have to give. Depending on who wins? That’s the path of least resistance. If there are less sellers, sellers that don’t have a conviction on their decision, etc, they could turn to buyers along with the other buyers, taking the market up.

In this chart, you’ll see where it finally broke down through that support line.

We saw that moving up along the line on Monday.

I’ll have the cluster charts up tomorrow morning so we can see exactly what happened and when.

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Here’s the cluster chart of that same move.

There were fewer and fewer buyers near the sell off. Additionally the price failed to make new highs.

As a buyer, the failure to make new highs would be an indicator by itself. However, it’s extremely relieving to also see what buyers and sellers are doing. If I was long here and started to see this I would not like the feeling it gave me.

Being short you can see people “on your side” or pushing to sell it and move price down.

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Always keeping my charts up to date. I mentioned this a few weeks ago but wanted to remind myself that it’s crucial to having your “feelers” on the market.

Here’s my look at the hourly charts:

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion.

Perfect, we have our levels, key price levels and hopefully an overall sentiment of market. Watch an indicator to cross over then make our trade right?

No! We have MORE information we can get into. Information that you should always study and consider before you think about trading.

Order flow. By opening a cluster chart for the same time frame, we can see what buyers and sellers are doing every step of the moment.

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results. The figures here represent an opinion.

If you look at the cumulative delta at 3:00 PM on 7/7 it’s at -138,858. Don’t get too caught up in this number. It can grow to extreme levels on either side. I’m more focused on what’s happening around these extremes.

So I look out to the current time, 7:00 PM 7/8. The cumulative delta has increased by 14,612. That means there were that many more buyers than sellers.

Why? I’ll save you the frustration of trying to answer that. You’ll never know. Could be banks, individuals or people covering short trades from the previous high of about 3,182.00.

But, we don’t need to know why, we just need to observe that’s what’s happening in the market during a consolidation period near key levels.

So we watch and observe how the players trade the lows and highs of that channel.

More information to make better decisions with your trades.

Happy trading!

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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I’m seeing a lot of opinions whether or not the S & P is Bullish or Bearish. Pivotal times on any chart can be nerve racking. It’s hard to stay objective, which is why we try to gather as much information as possible before making a decision.

Here is an hourly chart after the close today (7/14/2020).

Now taking a look at the cluster chart on a 2000 tick time frame:

So this is saying there are potentially more buyers coming in. This may mean that they can take it up, or that despite there being more buyers, the sellers may be able to hold it and get a sell off. However it’s trading near key levels and this is where decisions are made.

The next chart is taken from 7/13 around 9:00 AM. This was right before the spike then hard sell off. This section shows there were potentially more sellers during this time but the price spiked then sold off. Why? With this you have to keep looking forward in time (see second chart below).

Directly above you can see where the buyers are aggressively buying but the price doesn’t seem to be able to move up. In one of the previous posts, I say always ask yourself what you would want and not want to see if you were a buyer or a seller.

It puts it in perspective and hopefully provides a more objective look 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.

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The ES Mini has continued to follow the rules of it’s current uptrend validated by breaking through resistance that turns into support.

There appears to be an upward price trend within the longer term price channel. From it’s last move up it respected the 61.8% Fib Extension then traded back down to previous resistance that is now support.

There’s potentially opportunity for continued upward momentum if buyers continue to validate and respect key levels.

Beware of price movement to the downside that could attract sellers for downside movement.

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.

Optimus Flow

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As we pointed out yesterday, the ES Mini was following an internal uptrend channel within a larger price channel.

Today price broke through the bottom of the internal price channel and appears to be testing the first level of support:

The uptrend has the potential to continue despite a possible short term pull back. Using the Fib Retracement & Extension tool may help shed light on potential levels while monitoring overall market sentiment.

Moving to the cluster chart to see buying and selling, watch how sellers are interacting with the lows as it may potentially indicate their ability to push it lower or if buyers are absorbing their selling.

Cluster charts can make it slightly more challenging to see the bigger picture with buyers and sellers, so I refer to my 4hr cluster 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.

Optimus Flow

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After today’s trading it appears that the market potentially rejected the lows it made below the high on 7/15.

The 3 hourly bars after the low were all up and made higher lows except for the second bar with a long tail.

Will be watching to see if buyers potentially come into the market and back up the move.

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.

Optimus Flow

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Although price shortly fell below support and buyers were able to take it back above that level, sellers we quick to come back into the market and keep price moving lower.

It’s now sitting at our second support area where buying and selling need to be monitored to get a clear outlook on where price may potentially go.

Let’s take a look at what was happening with sellers and buyers during the price movement back above support, then what ultimately led it to break below:

We see buyers experiencing lower highs while sellers were still attracted to the prices at the bottom of the range.

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.

Charts Courtesy of Optimus Flow

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On the 15 minute chart of ES Mini’s, there is a potential future crossover of the Tenkan-sen and Kijun-sen POTENTIALLY indicating a short term up move. However, with the recent weakness and multiple tests of support levels, I’ll be closely watching follow through on any price movement.

I’ll also be on the lookout for sellers coming in at the lows when it continues to test support.

On the hourly chart, the potential upward move doesn’t appear as imminent as it does on the 15 min.

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.

Charts Courtesy of Optimus Flow

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On our previous chart I noted a potential 15 min crossover of the Tenkan-sen and Kijun-sen to the upside.

This did develop and then price also went above the Senkou Span lines on the 15 min chart.

On the hourly chart the conversion line crossed over as well, however, price is hitting the Senkou Span line which potentially acts as resistance when price is below it.

Looking at the Market Delta, you can see the aggressive selling at the lows of the range then it failed to make lower lows. Sellers got squeezed and buyers came in pushing it 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.

Charts Courtesy of Optimus Flow

ES Mini’s had a significant down move on the hourly charts, coming close to the longer term uptrend support area.

Watching the delta in this area may potentially expose what direction the market is favoring after the consolidation period.

On the 2,000 tick chart we can see more detail:

If sellers stay passive and weak at the top of the consolidation range buyers could potentially move the market up. However, we are seeing active selling at the lows. That’s where are focus should remain.

If sellers are selling the lows but there’s no follow through, there may potentially be a upside puke.

For the Ichimoku on the hourly candlestick charts:

With price trading near the cloud, it’s very possible we could continue to see a consolidation period play out until price hits the lower channel level around 3205.00 - 3210.00 depending on time.

Charts Courtesy of Optimus Flow

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.

So what are the ES Minis going to do? It has surprised me a few times over the last week (not to mention Gold, which is suitable for another post), but overall it seems to be respecting already identified areas that may potentially indicate continued uptrend.

Here’s the first few observations of the moves:

For the move starting at 3204.25 on the 28th to the high 3257.00 on the 29th, here are the Fib Retrace levels. It just wicked the 61.8% level.

If this HAPPENS to be the low of the retrace, here’s the Fib Extension levels to look out for:

“Ok, I get it move on”. Yes you’re right, time for the delta analysis.

So, for the first significant test of support on the long term uptrend happened on 7/9:

I’m taking the two closest negative bars before the move up out of the range to calculate the amount of active selling contracts hit the bid.

Spot 1 = -4,447 Delta.

Second test was a few days later on 7/14:

Spot 2 = -8,780 Delta.

Third and fourth test:

Spot 3 = -11,063 Delta.
Spot 4 = -14,462 Delta.

So we have price moving higher while the support tests are attracting more active sellers.

To recap:

Spot 1 = -4,447 Delta. Price = 3113.75
Spot 2 = -8,780 Delta. Price = 3129.75
Spot 3 = -11,063 Delta. Price 3188.00
Spot 4 = -14,462 Delta. Price = 3201.25

So we are seeing more selling at the support levels at HIGHER prices.

In fact, we saw a TON more active selling throughout the entire move from 3113.75 to 3201.25.

The Cumulative Deta started at -19,190 at Spot 1 and ended at Spot 4 at -102,856.

So a total of 83,666 ACTIVE sell contracts in a move up of 87.50 points.

With price moving up despite the massive amount of selling on Cumulative Delta, this means that on price moves up it didn’t require a lot of active buying because there weren’t as many sellers offering.

I have two questions here because I do think the market may potentially come to a pivotal point with a significant move ensuing:

  1. Are banks and big players selling the dips that are being absorbed by optimistic retail traders?

  2. Or are the banks and big players on the bid passively getting long, which would support why we are seeing aggressive selling into the lows and it fails to break below support?

What are your thoughts?

Charts Courtesy of Optimus Flow

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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I got another great reminder today that updating your charts daily can help identify so many more opportunities.

Here is the hourly candle chart I always keep updated:

Notice how closely the market is trading near key levels.

It’s trading “as expected”. This can be a fun time to trade, when your expectations of what the market should do aligns with what it is actually doing.

Keep updating your charts and watch cluster charts near key levels! Have a good weekend.

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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ES Mini’s continue to move up. I’ve updated some key levels and other trend lines I’m seeing to better identify key levels or areas.

Cluster Chart with market delta coming next.

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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After Close Market Update

The hourly bars closed above a resistance level at the close of trading today which potentially indicates the strength of the market until prices continue to keep moving up.

As we have seen lately, the market continues to challenge levels of support so be aware of a potential retrace to key levels of support:

Although price is following the trends along with support and resistance levels, there’s a lot more happening beneath the surface:

Here’s our cluster chart with time statistics. As you can see, the first high actually had more active selling than buyers despite price moving up. On the second high, there was more active buying than selling.

This potentially could indicate a change in overall sentiment of the market as it appears that more buyers are interested in these higher prices than before.

I will be watching to see if they can keep prices high or what their risk tolerance is in the case of a retrace.

Charts Courtesy of Optimus Flow

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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Price is continuing to respect key levels in this uptrend. Take a look at my last post, the key changes there were two things:

  1. The hourly bar closed three times above 3299.75, indicating some acceptance of the move up.
  2. On the market delta, I pointed out two spots that showed active selling on the first test of resistance, then on the second test we actually saw more active buying. This was a significant change in sentiment.

Here’s our charts about 6 hours before market open:

That change in sentiment moved the market up 20 points and is now sitting above support at the 100% fib extension level from the previous rally then retrace.

If you look at the market delta, you’ll notice that once price was established above the 100% fib extension support line, selling seemed to dry up near that level going into the night session:

If sellers fail again to push it lower it may potentially attract buyers to bring price up further.

Charts Courtesy of Optimus Flow

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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Price moved below the new support but quickly retraced and is currently holding above it:

On market delta, it was evident buyers were quick to pick up the lower prices which pushed the market back up.

Charts Courtesy of Optimus Flow

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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Price is moving up and here is the level for the 127% fib extension level.

Watching for a test of the 3333.00 level to see if that will be an accepted level by the market.

Charts Courtesy of Optimus Flow

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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I love the weekly analysis before the open. You get to see the big picture and dial down on the key levels you’re interested in. What I haven’t done in a long time is exactly that, look at the big big picture. It’s easy to get caught up in the day to day.

So I’ll do this one a little different it will be a test or game to see if anything longer term is contradicting what my shorter term always updated charts are saying. So we will start with my first chart showing the bounce off the 161.8% Fib Extension:

If it remains a typical uptrend, the dips will hit support and sellers may show up at first, but potentially back off without any downside continuation.

Market Delta doesn’t show anything out of the ordinary. After hours small uptrend with positive delta. The only thing to note was around the 3325.00 level when sellers were testing those lows during the day, the following lows were accompanied by LESS active sellers.

We’ve seem to see this particular pattern in an uptrend. Price goes above support, sellers want to reject it so there’s heavy selling on the first test. Heavy selling on the second test but we calculate the delta and watch volume to realize there was actually less selling. On the third if it holds a potential buy opportunity.

Now let’s take a look at a longer term chart:

Turns out, I did miss some things by not keeping my longer term charts on point :grimacing:. That’s OK, it’s a new week and now more information than we had before.

It appears that price could potentially converge on a key intersection. I have to admit, although order flow is the key driver of price, I think the news will effect order flow significantly.

Stay up on news and numbers, watch order flow and cluster charts to see buying and selling.

As always, comment with any questions.

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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ES Mini’s are making new highs. The price of my resistance is sitting about 3362.00. We will see if buyers can keep putting pressure on that level or if they give up and let it go back down to the bottom of the channel.

Here’s the Market Delta chart:

Let’s see what sellers can do and have their turn, if they fail to bring prices lower they potentially could puke at new highs.

Charts Courtesy of Optimus Flow

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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