posted 9.26 a.m. est
Pre-open Thursday 22nd October
ES opened below 1088 on Wednesday and immediately rallied above it. Following a test of Tuesday’s high Significant Sellers responded (red at top) for the first time in eleven days, just below 1100.
Late in the day there was a sharp sell off leaving Significant Selling (red) marked twice on the profile. However this is Ineffective Selling because Wednesday’s Value Area was overlapping/higher and wider.
Dayframe: It would be unusual not to see a red-at-bottom low tested during the following day session – Wednesday’s low was 1072.50. Red yesterday eliminates the long side for me now, at least until Significant Buyers are marked again (green) but we have yet to see an Effective Selling day (active Sellers generating a lower, wider Value Area). There is an important test for the Sellers at the 1063 poc if/when ES reaches that level.
Longframe: Wednesday’s close was weak, a new low for this week, with the SP500 index closing below the previous four days lows and the R2000 index closing below the previous eight days lows. Smallcaps are relatively weak in the longframe as well – unlike most indices R2000 has failed to test the September high this month and the same goes for Semiconductors SOX and the Industrial sector XLI. So there are negative divergences to take into account here along with the excessively bullish sentiment readings already discussed. It is also worth noting that the VIX hit a new multi-month low during the early part of yesterday’s session.
