Morning Update for Monday, March 17th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bearish
Overnight Inventory Change:Net long
Inside Day/Outside Day:Inside
Location of price relative to market profile: Between POC & Value area high
Notable overnight futures markets changes:
Up: NG (Nat Gas), NKD (Nikkei), PL (Platinum), Indexes
Down:KC (Coffee), ZW (Wheat), ZC (Corn), ZO (Oats), ZS (Soybeans), ZM (Soybean Meal), ZL (Soybean Oil)



News for the day:

Empire State Mfg Survey: 8:30a
Treasury International Capital: 9:00a
Industrial Production: 9:15a
Housing Market Index: 10:00a

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: We have officially entered March Madness and everyone will be filling in their tournament brackets. When considering the teams most likely to win, it is wise to consider the probability of the seeds playing each other when making the pick.  For example, there is a much greater chance of an 8 eed upsetting a 9 then a 16 seed upsetting a 1.  Similarly, the markets can be looked at as a game of probabilities.  When the markets are in trending mode, as has been the case for the past year, and are flowing in one direction intraday with confirmation from the internals, then the high probability for a breakout trade is much higher than when there is mixed market breadth and the ticks have been trading in a range for the entire day.  Currently, the S&P is in more of a horizontal trading pattern after selling off last week from the all-time highs.  When the bears try to wrestle the price action from the bulls and switch the market sentiment, there is typically an increase in volatility and more whippy, two-sided price action until the trend continuation or trend reversal is confirmed.  Intraday bias is neutral/bias.

Stock of the Day: Kohlberg Kravis Roberts & Co.- Bearish tenkan/kijun cross

ES Daily Trend: Neutral/Bullish

ES Weekly Trend:  Bullish

ES Monthly Trend:  Bullish 

Weekend Update 3.16.14

Morning Update for Friday, March 14th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bearish
Overnight Inventory Change: Neutral/long
Inside Day/Outside Day:Inside
Location of price relative to market profile: at value area low
Notable overnight futures markets changes:
Up: HG (Copper), SI (Silver)
Down: SB (Sugar), KC (Coffee), ZO (Oats), NG (Nat Gas), ZM (Soybean Meal), ZS (Soybeans)



News for the day:

PPI: 8:30a
Consumer Sentiment: 9:55a

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: Predicting what will happen in the markets is comparable to determining weather conditions.  In both cases, it is easier to figure out the shorter time frames based on the current jet stream flow or trendline pattern.  The longer the time horizon, the more variables that come into play which could influence the sentiment.  Given the longterm bull market that we are in, any pullbacks could be considered blips on the radar until there is sustained bearish momentum.  Bias has been primarily neutral during the premarket session but the bears have managed to sell prices through the high volume zone of 1865 and taking out 3 VPOCs in the process of yesterday's selloff.  Watch for opening price action at the tape to see if the bears continue the liquidation.  Intraday bias is neutral/bearish. 

Stock of the Day: Amazon, Inc. (AMZN)- Announced update to Amazon Prime pricing

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Thursday, March 13th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bullish
Overnight Inventory Change:Net long
Inside Day/Outside Day:Outside
Location of price relative to market profile: Above value area
Notable overnight futures markets changes:
Up: ZO (Oats), 6N (New Zealand Dollar), ZW (Wheat), 6A (Aussie Dollar)
Down: NG (Nat Gas)



News for the day:

Jobless Claims: 8:30a
Retail Sales: 8:30a
Import & Export Prices: 8:30a
Business Inventories: 10:00a
Treasury Budget: 2:00p


*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: When the S&P enters consolidation mode, the way it trades can be related to a springboard.  Energy is built up within a trading range before elevating to higher levels or selling off to lower prices and the longer the market sits within the range, the more of a burst that often occurs in either direction.  The bears had their turn at it yesterday to sell the markets, but the bulls are still too resilient and bought up the dip to bring the trading activity within the high volume node from 1865-1880.  The buying has continued during the globex session, but any trading within the volume zone should be handled with care as both bulls and bears have been active at these levels.  Intraday edge is neutral/bullish.

Stock of the Day: Glu Mobile, Inc. (GLUU)- 52 week highs made yesterday

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Wednesday, March 12th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bearish
Overnight Inventory Change: Net short
Inside Day/Outside Day:Outside
Location of price relative to market profile: Below value area
Notable overnight futures markets changes:
Up: ZO (Oats), GC (Gold)
Down: NKD (Nikkei), ZS (Soybeans), ZM (Soybean Meal), SB (Sugar), ZL (Soybean Oil), CL (Crude Oil), KC (Coffee), HO (Heating Oil), PA (Palladium), ZC (Corn), HG (Copper), CC (Cocoa)



News for the day:

Petroleum Status Report: 10:30a
Treasury Budget: 2:00p

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: I had a conversation with a fellow trader the other day about our trading strategies and approaches to trading the markets.  He uses more of a regression to the mean strategy and looks to fade moves in either direction. I asked him how he has been successful in the giant bull market we have been in dating back to 2013. His answer was simple: Trading small and diversifying across markets.  While the cloud system is more of a trend following method,  it is clear that various ways exist to be profitable as long as the discipline is there to carry out the plan. 
The ES is trading below the high volume level that had been accumulating for the past 5 days and currently is outside of Tuesday's range during the globex session, both signs of selling.  There is still the gap to fill from March 3rd, so if the liquidation continues at the open, the first short profit target will be 1849.5. Intraday edge is bearish.

Stock of the Day: Plug Power Inc. (PLUG)- Shares down 40% yesterday

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Tuesday, March 11th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bearish/Neutral
Overnight Inventory Change: Bearish/Neutral
Inside Day/Outside Day:Inside
Location of price relative to market profile: Near POC
Notable overnight futures markets changes:
Up: ZO (Oats), SB (Sugar), SI (Silver), KC (Coffee)
Down: ZC (Corn)



News for the day:

Wholesale Trade: 10:00a

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: Trading the S&P in some ways is similar to buying a new car.  When buying a vehicle, you search various newspapers and websites to determine how much it is worth on the quest for the best value.  A dealer may have a listing for a few thousand more or less than a neighboring one based on their inventory levels at any given time.  If they really need to sell cars and clear their inventory they will be willing to "hit the bid" and negotiate a lower price.  On the flip side, if you need to purchase the car right away then a higher offer price will be accepted to meet the need.  In the same way, the inventory levels of the S&P are in continuous motion throughout the day based on the supply and demand for the contracts.  The current price is what the market is advertising, but the true value of the contracts on any given day may be higher or lower. This is where market profile comes in.  The value area is where 70% of the previous day's volume occurred at and serves as a point of reference for the current day's trading. Large institutions look to enter trades at high volume nodes based on the fact that significant volumes had occurred at the levels previously, providing a strong base for support and resistance zones.  For the past 5 trading days, the value areas have been trading in a horizontal range, a signal that the market is in a basing pattern near the all-time highs.  It is more of a bullish setup because it means that the bulls are maintaining the high prices until further catalysts occur that would bring in new buyers.  Price action within the 1865-1880 will be more choppy because of the large volumes traded, but watch for a breakout of the range in either direction for a high probability trade, especially if the time & sales displays large size.  Intraday edge is neutral/bullish.

Stock of the Day: Baidu, Inc. (BIDU)- Near all-time highs

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Monday, March 10th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Neutral
Overnight Inventory Change: Neutral
Inside Day/Outside Day:Inside
Location of price relative to market profile: Near POC
Notable overnight futures markets changes:
Up: NG (Nat Gas), KC (Coffee)
Down: ZO (Oats), ZC (Corn), SB (Sugar), ZW (Wheat), CL (Crude Oil), ZM (Soybean Meal), PL (Platinum), PA (Palladium), NKD (Nikkei)



News for the day:

NONE

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day:There was a famous commercial that penned the slogan "why ask why?" The same can be said for the markets.  CNBC analysts continue to generate stories as to the reasons for why the S&P fluctuates each day. Whether it's the situation in the Ukraine, a Janet Yellen press conference, or because the groundhog saw it's shadow, there is always going to a headline.  The problem with this methodology is that they are in the entertainment business first and all of the analysis is based on hindsight.  If you are a day trader, the main focus is on price action RIGHT NOW in the moment.  If prices approach all-time highs of 1887.5 today, we watch to see how fast the tape is moving and look to see if there is a flush of buyers who want to push the market higher.  Not much volatility during the premarket, but the bulls continue to be active in the larger time frames. Intraday edge is neutral/bullish.

Stock of the Day: International Business Machines (IBM)- Bullish cloud break

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Friday, March 7th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bullish
Overnight Inventory Change: Neutral/bullish
Inside Day/Outside Day:Inside
Location of price relative to market profile: At POC
Notable overnight futures markets changes:
Up: ZC (Corn), KC (Coffee), ZW (Wheat), ZM (Soybean Meal), ZO (Oats), ZS (Soybeans), CT (Cotton), ZL (Soybean Oil)
Down: HG (Copper), SI (Silver)



News for the day:

Employment Situation: 8:30a
International Trade: 8:30a


*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: CNBC's daily market headlines is starting to sound like a broken record- "S&P makes all-time highs." Even the most fervent bears will have to admit that trading with the trend has been the most profitable strategy dating back to 2013.  Today marks a significant day from a news perspective with the employment situation coming out at 8:30a.  The announcement of the monthly jobs numbers often provides the catalyst for higher prices or potentially a change in market sentiment due to longer timeframe traders entering the market who make their decisions based on macro events.  Trading during the premarket has been primarily bullish, but all could change once the news is released. The key levels to watch will be Thursday's high (1881) and low (1871). Intraday day edge is neutral/bullish contingent upon the jobs report.

Stock of the Day: Qihu, Inc. (QIHU)- Made all-time highs yesterday

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Thursday, March 6th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Neutral
Overnight Inventory Change: Neutral/Net long
Inside Day/Outside Day:Inside
Location of price relative to market profile: Above value area
Notable overnight futures markets changes:
Up: NKD (Nikkei), NG (Nat Gas), PA (Palladium), 6A (Aussie Dollar), 6N (New Zealand Dollar), ZM (Soybean Meal), ZL (Soybean Oil), SB (Sugar),ZS (Soybeans)
Down:KC (Coffee), ZW (Wheat), OJ (Orange Juice)



News for the day:

Jobless Claims: 8:30a
Productivity & Costs: 8:30a
Factory Orders: 10:00a

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day:As Jackie Wilson so eloquently stated in his 1960s classic, "Your love keeps lifting me higher & higher."  The same could be said for the S&P in that stocks keep lifting higher & higher.  A new all-time record was made on the ES at 1877.75 during the globex session, a sign that international investors are still seeing value at these elevated levels and are purchasing the contracts prior to the market open.  Prices have spent time & volume near Wednesday's high of 1875.5 which means that the buyers are protecting the level for further potential upside.  These two levels will be key to watch for today as prices explore unchartered territory.  Intraday edge is neutral/bullish.

Stock of the Day: Alcoa Inc. (AA)- Near 52 week highs

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish 

Morning Update for Wednesday, March 5th

Major Support/Resistance Levels- ES

Daily Outlook

Prior Day Market Sentiment: Bullish
Overnight Inventory Change:Neutral
Inside Day/Outside Day:Inside
Location of price relative to market profile: Near value area high
Notable overnight futures markets changes:
Up: PA (Palladium), SB (Sugar), PL (Platinum)
Down: NG (Nat Gas), ZO (Oats), CT (Cotton)



News for the day:

ADP Employment Report: 8:15a
ISM Non- Mfg Index: 10:00a
Petroleum Status Report: 10:30a
Beige Book: 2:00p

*Red highlight means the news is a market moving event;
yellow highlight means the news merits attention


Projected ES price action for the day: As the saying goes, "if it's too good to be true, it probably is." It doesn't always apply to the markets, however, when the bulls get euphoric.  We are in that type of market right now and trading it the correct way can be used to your advantage.  After Monday's selloff, not only did buyers make up all of losses, but the S&P made an all-time high yesterday. When looking under the hood at the market internals and comparing Monday's readings with Tuesday, the bullish activity was confirmed.  On Monday, the AD line started at -1200 but moved higher to -500 (+700) during the course of the trading day, a sign that the bulls were starting to buy on a big red day.  Yesterday, the AD line started above +1000 and was pegged there for the entire day, a sign of strength.  The globex session has been neutral with all of the trading occurring inside of the value area.  The key levels to watch will be value area high (1872) and the all-time high (1874.75). Intraday edge is neutral/bullish.

Stock of the Day: Chipotle Mexican Grill, Inc. (CMG)- All-time high made yesterday

ES Daily Trend: Bullish

ES Weekly Trend:  Strongly Bullish

ES Monthly Trend:  Strongly Bullish