posted 09.15am EST
from analysis 0309
>>In a strong downtrend it is rare to see a close above the highest high of the previous two days. That level is ES 707 for today and is also just below major resistance. If the significant sellers are offered price early in the week anywhere near that level it may be enough to get an aggressive response from them. Value building above that level would likely indicate higher prices in the short term and I wouldn’t look to short. The more ES prints below 690, the greater chance we’ll see another new low without much of an auction higher. With significant buyers absent last week it’s wise to eliminate the long side until they make an appearance.<<
Monday saw an early probe above Thursday’s value area (the highest VA last two days) which was tempting enough for the sellers.
ES spent a good while overnight consolidating just above 680.25 which is the halfway point from Friday’s low. As I’ve shown before this is the very first level to watch off a low to gauge short-term strength/weakness. ES currently prints 689.
Monday’s value area was overlapping/higher and narrower and generated less volume. That’s not a sign of strength.
In my judgement the sellers are resting, forcing a response from the buyers. As significant buying activity has not yet been seen I would still judge the 705/707 area as too far above recent value to not attract sellers, should the rally pre-open extend. If significant sellers do not emerge at that level, or below, it would be the first clue that control may be shifting albeit in the near term. Value building above 670 would be the second clue.
Best to assume sellers are in control and resting until further evidence tells us otherwise, so I will try and short this rally if there’s a fast rejection.
It’s worth noting that NQ (Nasdaq100 emini) tested Friday’s low on Monday and ES did not so there’s a divergence, albeit minor, and probably not bullish.
