Key Levels (S&P 500) for Friday 11/27/2009

E-Mini S&P 500
In case you guys were busy with the Thanksgiving festivities and missed the news, Dubai requested a debt 'standstill' till May; essentially saying they can't make payments on their debt until May, 2010 (full story on Yahoo Finance). It's a small loan - roughly $60 billion! That, in turn, shook up the world markets and the S&P futures took a nose dive down to 1082.75 (1082.50 is a Key level). So, now the question is: will 1082.50 hold? The Dubai issue has been on the radar for a while now, so I don't know whether it's really a sufficient catalyst for a big sell off, and not to mention, $60Billion is not really a catastrophe. But anything can happen so best to stick to the charts and levels.

Bullish Scenario (if 1082.50 Holds)
If 1082.50 holds, I'm thinking a move back up to 1097 is do-able, but I'm not anticipating it to be in one quick shot; although even that scenario is certainly possible if shorts decide to cover all at once at the open (unlikely). I'm anticipating price to make a rotational move up, making pit stops at the resistance levels along the way (refer to chart for levels). Initial area of resistance is 1087.50-1088.50, above that we have 1093.75-1097 (kinda wide, but that's how I'm reading it right now). 1100-1101.50 above that. Longs are counter-trend for now, so buy the dips, sell the rips!

Bearish Scenario (if 1082.50 breaks)
Below this area, we have initial support at 1078.50, and stronger support at 1076. Anticipating that area to hold on first touch; good area to scale out of short and reload on rotation. 1072-1075 are the range extension targets, and would be the second area to scale out of shorts, or even initiate a Long position. 1069.50 after that, and 1064 is the Final target if we get a big sell off.

Good luck tomorrow!

ES - Daily Bar Chart with Volume Profile and Key Levels

Wednesday 11/25/2009 - Market Review

I can't stress this enough: Enter trades at Key Levels! Don't get caught up in the DOM, the tick moves or the color of the current bar/candle. Have a plan prior to the market open, then be patient and wait for price to get to the areas where YOU want to conduct business. A few benefits to this approach:
1) You will have better control over your anxiety/psychology since you're waiting for price to get to the area you want, and you'll be prepared to enter the trade at that level
2) You'll avoid the chop in the middle
3) You'll be able to use a tight stop-loss since the difference between the level where you enter a trade, and the level where you're proven wrong will usually be within 2-3 points, if not less.

Following is today's 5-minute day-session chart. Look at the 5-min chart in conjunction with the Key Levels and Scenarios post from last night. This is simple stuff, just requires some patience and discipline. Happy Thanksgiving!

ES 5-Minute Day Session Chart for 11/25/09

Key Levels (S&P 500) for Wednesday 11/25/2009

E-Mini S&P 500
Scenarios posted last night worked out great today! I mentioned last night that "1098 could provide a bounce, as well as 1094-1095." - and we got a solid bounce at 1095 into the VPOC cluster, with price peaking at 1106.75. ES is currently trading at 1105.50, building value above 1100. Going into tomorrow, my bias is still bullish. From a seasonality perspective, we saw a huge up move on the day before Thanksgiving last year, but 2008 was a crazy year! At this point, I'm bullish above 1100, neutral above 1089 and bearish below 1089. This doesn't mean I won't initiate shorts if we move into the range extension areas (1115-1119), but above 1094, I'd rather buy the pullbacks. Below 1089, I'd like to sell the bounces. Today was an inside day, and the bullish/bearish scenarios haven't really changed since yesterday.

Lot of Econ #s coming out between 7:30 am and 9:00 am (cst). Durable Goods Orders, Personal Income and Outlays and Jobless Claims out at 7:30 am (cst). Consumer Sentiment at 8:55 am (cst). New Home Sales data out at 9:00 am (cst). Be prepared and keep an open mind; even though it's a day before a holiday, we could see some big moves tomorrow!

ES - Daily Bar Chart with Volume Profile and Key Levels

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Key Levels (S&P 500) for Tuesday 11/24/2009

E-Mini S&P 500
Monday rally pattern continues, and now 8 of the last 9 Monday's have been bullish! The bullish scenario put together last night worked out well; price made a solid up move over night once it broke above 1095.25. 1102 area acted as resistance over-night, and price rotated back down to 1099.50 and chopped around in that area till 8:10 am (cst). At the moment, the ES is trading at 1101.25 and the immediate price action is pointing towards lower levels. But we had a nice up move today, and price could just chop around and consolidate within Monday's range. High probability of range bound trade tomorrow so be nimble and mindful of your directional bias! GDP data out at 7:30 am (cst), S&P Case-Shiller HPI out at 8:00 am (cst) and Consumer Confidence data out at 9:00 am (cst). If you're new to the S&P futures, I would just sit out the first hour.

Bullish Scenario
We have a cluster of VPOCs from 1105-1106, and price needs to break through that to get some breathing room to the upside. After that, I would anticipate a test of the highs at 1112.25. Price has been knocking around that area for a few days now, and bears are getting too comfortable initiating shorts in that area, so a break-out through that area would not surprise me. Beyond 1112.25, 1116 is do-able with 1117.75-1120 being the range extension target zone. We also have some nice areas of support below. 1099 is near-term support in the Globex session. Below that, 1098 is previous week's mid-point. 1097.50 is the 50% retracement of the current swing on the Hourly chart. 1094 is the initial support level for tomorrow's session. There's a nice cushion of support below us, and I'm not anticipating price just slicing through all that in a single attempt. 1098 could provide a bounce, as well as 1094-1095. Bias shifts to bearish below 1090.25 (open gap).

Bearish Scenario
As you can tell, my current bias is to the Long side, but I must have a bearish scenario in mind since the market can do anything at any time! We have initial resistance in the 1105-1106 area (VPOC cluster), and that could be a good area to take a stab on the short side if momentum is weak. On the downside, if price manages to slip back through 1089, I would shift to shorting the bounces. Downside targets and areas of support are annotated on the Volume Profile chart.

ES - Daily Bar Chart with Volume Profile and Key Levels

Key Levels (S&P 500) for Monday 11/23/2009

E-Mini S&P 500
As @Jediphone pointed out on StockTwits, 7 of the last 8 Monday's have been bullish with an average gain of 1.28% (source: Phil's Stock World). In doing my own research, I found that the Monday after OpEx Friday was bullish in October, and the Monday of Thanksgiving week in 2008 was bullish as well. It's something to keep in mind, but of course, trades should be initiated based off what the market tells you in real-time. Existing Home Sales data out at 9:00 am (cst) tomorrow morning.

Bullish Scenario
1089 (VPOC from Friday) is near-term support. On the up side, we have near-term resistance at 1095.25. I'm bullish above 1095.25. After that, we have range extension targets in the 1098.25-1099.25 area, which could act as short-term resistance. If price gets to that area, I would anticipate a test of 1100, but that's a good area to scale out of Longs, and re-load at better prices. Above 1100, 1102.50 is a level that could offer stronger resistance and provide a rotation back to the 1099-1100 area. Above 1102.50, 1106 is strong resistance, and we have an Open Gap at 1108.50. We're currently building value in the 1094 area.

Bearish Scenario
1089 is the Volume Point of Control from Friday, and price would need to get below that level for sellers to begin taking control. 1085.25 is the next level of support, and the line in the sand for me between bullish/bearish bias. Below 1085.25, my bias shifts to bearish and shorting bounces becomes the higher probability play, IMHO. If we get below 1085.25, we'll likely test 1082.50, and quite possibly even break below it to get to that 1076-1079 area. I would expect the sell off to really accelerate if we break below 1076. 1064 has been the final bearish target for several days now.

ES - Daily Bar Chart with Volume Profile and Key Levels

OpEx Friday - 11/20/2009 Review

Friday played out beautifully, and the scenarios put together on Thursday night provided the preparation necessary to trade the price action in real-time. In the bearish scenario, a test of 1082.50 was anticipated below 1087, and we got that move in the overnight session at 6:10 am (cst): price hit a low of 1083.50, and closed at 1084.50 on the 5-min chart. I was anticipating a test of 1082.50, so not testing 1082.50 is also a valuable piece of information. That 5-minute candle at 6:10 am is a wide-range bar with heavy relative volume (heavy considering the time of day), and I would view it as a significant candle in terms of support/resistance. Mark the open/high/low/close of that bar - the levels could (and did) act as support/resistance in the near-term. Now observe the price action following that candle; price stabilized at the 1084.50 level and broke through the high of that significant candle (1087.50) at 7:30 am (cst). From there, price moved up and hit resistance at 1092.75 (Thursday's POC), and we then sold off all the way down to 1085.25 (78.6% retracement). What does this mean? Is it bullish or bearish? Well, lets see, if the sellers were really in control, I would expect a test of 1083.50, so score one for the bulls for halting the down move at 1085.25. Price then retraced back up to 1088 (a tick above the cash open at 1087.75), and sellers came in again, but this time, they could only push it to 1085.50. Again, if sellers were dominant, I would expect price to test the previous swing low at 1085.25. That didn't happen. Based off this information, I entered Long at 1086 with a 6-tick initial stop, which was moved to break-even once price broke above 1088. The stop was moved to 1088 (+2 pts) once price broke above the mid-point (1089.25). Price came within a tick of triggering the stop, and the exit was at 1090.00. Btw, I had a couple of other small trades prior to this one, but they were tiny winners (4-6 ticks), so I chose to detail out the setup that had some structure to it.

Options Expiration Friday
I checked out the chart from October's OpEx Friday (10/16/09), and see a lot of similarities between 10/16 and 11/20. I wasn't concerned with the absolute values/prices on each day; just the directional swings. Lets do a little compare & contrast between 10/16 and 11/20 and look at the similarities:

1. Price sold off in the overnight session on Both days.
   
2. Price retraced back up into the cash Open
   
3. Price stalled and reversed within the first 30 minutes of the open. Price began reversing down at 8:45 am on 11/20, and at 8:55 am on 10/16. The exact times aren't really important, but it's an interesting coincidence.
   
4. Price retraced back down on both days. Price broke below the Globex Low on 10/16, but wasn't able to get to the Globex Low on 11/20.
   
5. Price then chopped around, and moved higher into the previous day's POC on 10/16 and 11/20.
   
6. Price moved back down into the close, and the down swing began at almost the same times on both days.

Looking at price action for similar days in previous weeks/months is not a part of my trading plan. I just did this exercise because I saw many similarities. I don't know if there's any merit to looking at similar days in the past to get a heads-up on price movement, but I found this to be pretty interesting. If you have any thoughts on this, or have performed similar comparisons in the past, please post in the Comments section.

ES - 5-Min Chart (November 20, 2009)


ES - 5-Min Chart (October 16, 2009)

Key Levels (S&P 500) for Friday 11/20/2009

E-Mini S&P 500
The bearish scenario put together yesterday worked out great this morning. I was anticipating the move below 1100 to be fast - and price dropped 13 points from 1100.75 to 1087.75 in the first half hour of market open (1088 level marked as strong support for a few days now). The 1088 support level held (a 1.50 pt poke below 1088 doesn't really invalidate that "area" IMO), and I'm still counting on that area to hold as support. Could price break below it and test 1082.50? Sure. But I would anticipate a bounce around 1087 on first touch tomorrow (if we get there). Buyers were very active between 1090 and 1091.50 today. The VPOC for today was around 1092.75, and price is currently building/accepting value above 1091. Lets also keep the big picture in mind (daily chart). From that perspective, today's down move is no big deal, and I would anticipate the bulls to actively defend the Key areas of support (1088, 1082.50, 1076).

ES - Hourly Chart (Downside break-out from Triangle)


Bullish Scenario
On the upside, we now have resistance in the 1197 area (anticipating that to hold on first touch), then minor resistanct at 1100, followed by stronger resistance around 1102.50. We also have an open gap at 1108.50 now, and I would anticipate a gap fill on a move above 1102.50.

Bearish Scenario
On the bearish side, I'm anticipating 1087 area to hold on first touch. Below that, we could test 1082.50. It's interesting that price closed at 1082.25 on last month's options expiration Friday. Anticipating 1082.50 to hold on first touch, at which point, shorting the bounce would be a safe play for re-test/potential break of 1082.50. Below 1082.50, we could get a quick move to 1079; and then a grind down to 1076.50 area. Anticipating 1076 area to hold as support on first touch (scale out of shorts, or reverse to Long for a scalp, or possibly more here). If the selloff is really nasty, we could even get to the ultimate downside target of 1064 (not anticipating a strong selloff).

ES - Daily Bar Chart with Fib Levels (Perspective!)


ES - Daily Bar Chart with Volume Profile and Key Levels


Crude
Don't have time to do the levels for Crude tonight.