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Morning Es Trading

My two areas of interest for Monday's regular session are 1410.75 and 1418.50.
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Friday's Market Review

A quick glance at how the various equity contracts performed on Friday left most (me included) scratching their head and thanking god for the forthcoming weekend. Here's a brief rundown. The Ym was strong, the Es was tacked on a few handles from Thursday's close, the Tf was about flat and the Apple (AAPL) driven Nq contract as simply weak. Nasdaq bulls were living high on the hog as AAPL traded higher on a seemingly daily basis, but ever since the stock topped $700 in mid-September it's been incredibly rough sledding. Memo to Nasdaq: this is the problem with allowing a single stock to rule the proverbial roost.

10 Minutes Es -- Chart 1

Source: eSignal

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As far as Friday's RTH auction is concerned, the session can be broken down into two obvious trends. The initial and faster-moving one began at the 9:30 a.m. ET open and consisted of persistent selling from 1420 back down into the top end of Thursday's RTH range. The second trend began as the contract recaptured 1414 (the session's RTH vwap) and slowly began to drift higher, toward 1417. The bottom line is the trading was largely lifeless and despite the contract closing the session above its 50-day sma, I do not believe the bulls deserve anything more than a participation award. The fact that demand continues to be cut off toward 1423.50 is an obvious problem in our quest to break the current trend of lower highs.

Monday's Es Trade

E-Mini S&P 500 futures are trading roughly three handles lower in overnight trading, but with little in the way of economic data ahead of Wednesday's 12:30 p.m. ET FOMC announcement (the meeting begins Tuesday morning), I suspect most market bulls will be satisfied if the Es simply remains above Friday's RTH lows.

10 Minutes Es -- Chart 2

Source: eSignal

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My two areas of interest for Monday's regular session are 1410.75 and 1418.50. Until we see a sustained break of one of those two levels I believe the odds favor continued channel play (with 1414 acting as a pivot within the horizontal chop).

Should sellers turn more aggressive at this morning's open and hammer the Es back beneath 1410.75 our focus will shift considerably lower, first toward 1406 (which I regard as nothing more than an initial and minor speed bump) and then on to 1401.50/1402.25. Any test of the low-1400s would likely be accompanied by a pullback/backtest of that same speed bump near 1406. Two additional reference points to make note of are the approximate proximity of the 10- and 50-day SMAs. Based on my chart, the 10 day SMA is at 1409.75 and the 50-day SMA is at roughly 1411.50.

The flip side of the above scenario would be an upside resolution to our 1410.75 -- 1418.50 channel. Simply put, all trading above 1418.50 supports buyers and their attempts to push through 1423.50 and continue on toward 1427.25. An additional upside reference point to make note of would be the .618 retracement level (1419) from the Sept. 14 high and Nov. 16 low.

Current conversion formula: Es (December contract) value X .100489 = SPY Value

1430.50 = 143.75*

1427.25 = 143.42**

1423.50 = 143.05***

1418.50 = 142.54**

1414 = 142.09*

1410.75 = 141.76*

1401.50 - 1402.25 = 140.84 - 140.91*

1399.25 = 140.61**

1394.25 - 1395.50 = 140.11 - 140.23***

1390.75 = 139.75*

1387.50/1388 = 139.43/139.48**

1383 = 138.98*

1377.75 = 138.45***

At the time of publication, the author had no positions in any of the securities mentioned.