#ES_F Daily Trading Plan March 25th 2024
A short week with equity markets closed on Friday to end the Month and Quarter. We also get PCE data, the Fed's preferred inflation gauge and Jerome Powell speaks afterwards. Today I offer 3 scenarios
Previous Day Review
We ended the week on a down day that was low volume, rotational and neutral. We filled the gap from the Thursday's overnight session repairing weak structure (in the form of a gap) but we still have weak structure below with Wednesday's trend day up.
Looking at the weekly profile, we were able to cleanly break and hold above the previous 3 week balance where I am calling 5245 support. The balance area was about 10 points higher but we have much better supportive structure here so if we auction below 5245 I will start looking for downside value. 5195 is where we OTFD on the weekly, the bottom of our weekly Volatility Range, slightly above our previous month high, and roughly the bottom of our trend channel.
Key Points
Poor High on Friday's session.
Trend up on the Monthly and Weekly timeframe still intact.
Session Stats
Volume: 810k
Range: 17 points
Rotational Factor: -1
Delta: -17k
Overnight Review (updated at 0815 CT)
The overnight session has been similar to Friday's overnight so far. We have made several attempts at auctioning above Friday's settle in the Asian session and in the Euro session. We are currently OTFD inside Wednesdays post-FOMC range.
Session Stats
Volume: 130k
Range: 22 points
Rotational Factor: -10
Delta: +1200
Positioning: 100% short
Mission Plan
ES has been trading mechanically since FOMC last week and this week we have more Fed speakers and inflation data including PCE on Friday (when equity markets are closed). We are in an uptrend on the Monthly and Weekly timeframes but we are in balance on the Daily and positioned for a gap lower in the overnight.
I am often more cautious on Monday's and more so when the market is giving conflicting information although an open outside of the previous days range does provide more value.
Scenario 1
Look for continuation of the OTFD on Friday and in the overnight session. Overnight inventory is 100% short and could provide a move up at the open so I will be looking a lack of acceptance of higher prices and/or a inability to fill the gap.
5289-93 Gap fill - Previous Settlement. I will look for the opportunity to put on a short in this area. This has the opportunity for a very large move down so I will allow more room for this trade to work out. 5267-71 Singles from Wednesday's FOMC reaction and 2σ↓. This is a mechanical level. If we bounce at this level I will look for an opportunity to get short for a move back through this level. Also poor/weak lows here will likely trade through. 5257 Previous ATH, pWkHi, 5200 SPX. This is a likely target. 5245 FOMC Breakout and confluence with structure. This is my ultimate target for this scenario. Depending on how we arrive at this level I will potentially look for a long.
Scenario 2
If we get an inventory correction I will look for follow through/new buying that auctions back into Friday's range. This can sometimes take a while to develop but if we not getting acceptance/volume at lower prices I will look for pressure to the upside that pushes overnight shorts to cover.
5293 Previous Settle/ Red to Green. This is where all the overnight shorts are wrong. 5306 Friday's HOD and where we OTFU and put in an Outside bar.
Scenario 3
We get a low value rotational day. This is harder to put firm levels on but can be monitored by watching how value develops. We will have tapering volume at the highs and lows with price probes that get quickly rejected. I will likely sit this out.
Notable Earnings
No Notable Earnings on MondayImportant Economic Releases (central time)
0725: Fed's Bostic
0805: Fed's Goolsbee
0900: New Home Sales (February)
0930: Fed's Cook
1200: 2-yr note auction ($60 bln)
later in the week
Tuesday: Durable Goods, Consumer Confidence
Thursday: GDP, Initial Jobless Claims, Chicago PMI
Friday: (equity markets closed) Core PCE, Jerome Powell
Other Markets
/GC above Friday's HOD
/CL above Friday's HOD (the whole energy complex looks good)
/MBT above 68500
/HG below the ONL