Wednesday 9th October – ES_F Review

Morning Traders,

Another really tough day yesterday in the ES with price whipsawing around at various points in the day. We opened inside the gap and sold off down below 2900, but significantly couldn’t get any lower than 2894 during E period in the early half of the day. With rejection below 2900, we quickly gained acceptance above, and rallied strongly back towards the T+2 low in G period – coincidentally we stopped 1 tick shy of that low, alerting us that technical traders where active in this market. K period broke into the T+2 range, but stopped short of the VPOC by a single tick, again confirming that technical traders were moving this market around. We sold off heavily at the close, with price being taken a tick or two above 2890 during settlement.

The big picture here is that the market is really lacking conviction to go one way or another, and fear from both bulls & bears is causing liquidation breaks to the upside and downside. Equities are seeking direction big time, and perhaps it may come with any positive news from the trade talks happening this week in DC. Personally speaking, I’m only taking on average 1 trade per day at the moment, and it’s mainly base hits with tight stops and high probability profit points. Everything is telling me to sit on my hands and sometimes that’s ok, particularly if you are a new trader with a small account.

Overnight, inventory is very long, with the overnight high at 2934.25 (also today’s T+2 low) which is quite significant, notwithstanding the 42 handle range in globex! In the run-up to the open, we’re seeing inventory correcting somewhat and we’re slated to open inside range and just outside value to yesterday’s upside. The first thing we’ll look for is any further correction to inventory during A & B period, before looking for what acceptance, if any, can be found inside the single prints from K period yesterday. I still have a bearish outlook on equities at the moment, and there’s a feeling that even good news won’t pump this back above 3,000 any time soon (now that I’ve said that, we’ll probably end up there this week!). We have a poor low to the downside at 2990.25 so we expect that be corrected in the coming days.

On the flip side, big size is buying up the liquidation breaks, so this will have to resolve itself if we’re to move forward and begin trending in either direction.

Stay safe, and happy trading!