Wednesday, November 18, 2009

Key Levels (S&P 500 and Crude) for Thursday 11/19/2009

E-Mini S&P 500
After yesterday's inside day, I was anticipating some range expansion today but all we saw was range-bound price movement. Maybe this is due to options expiration week? Who knows (who cares)? The levels were defined and price just bounced around within those areas. Today worked out great for scalpers, but if you were holding on to trades too long, anticipating range expansion, you probably scratched a lot of trades. In any case, price closed at 1108.50 (known level), with the VPOC/VWAP around 1105.75. Yesterday's VPOC was right around 1105 as well so keep an eye on that area. So far tonight, price hit a high of 1109.50 in the Globex session, and then pulled back to 1104 (1103.25 is previous week's high, and 1100 is near-term support). If you look at the 60-minute chart, you'll notice price is consolidating in a triangle, and it will break out of this formation sooner or later. On the upside, I'm eyeing the 1122 level and feel that price could test that level very soon. We've had two tight range days, so be open to larger moves in the coming day or two. Jobless Claims data out at 7:30 am (cst) in the morning.

Bullish Scenario
If we get a break-out to the upside, I would not Short against it until the momentum died down or we approached a big resistance area like 1120-1122. When price broke out above 1103.25 on 11/16, it ended up making its way all the way up to 1112.25 (9 pts higher). So, if we get a break out above 1112.25, could we again move up 9 points, to 1121.25 (oh so close to that 1122 level)? You bet! "Anything can happen at any time" - keeping that phrase in mind will allow you to be open to any and all possibilities instead of having the mindset where you Know what will price Will do. No one Knows!

Bearish Scenario
Looking at the Volume Profile chart, we can see that price has been building value higher over the past few days. We've established nice cushions of support from 1088 to 1100. But because we've established all this support, if/when price breaks down and we get a sell-off, the move could be fast & furious. A lot of Bulls will be put into Losing positions below 1088, and I see that as being the Key support level for the time being. Below that, we could go to 1076 fairly quickly, and finally 1064. I will rely on the 1100 support level until it's broken. Bullish above 1100, bearish below 1088.

ES - Hourly Chart with Price in a Triangle

ES - Daily Bar Chart with Volume Profile and Key Levels

The Crude (Dec contract) moved within the support and resistance zones defined in yesterday's CL Volume Profile chart. The 138.2% extension was at $80.34, and the high of day on Crude was $80.33 today. Crude also broke out of the bearish channel today. I'm anticipating near-term support in the $79 area, and strong support in the $78 area. Bullish above $79 and Bearish below $77.80.

CLZ9 - Daily Bar Chart with Volume Profile and Key Levels

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