14 Jan 2016

In times like these I have learned to zoom out to the higher timeframes:

I am looking at the similarities between ES and DAX – both are currently trading around the SEP/OCT balance. Block out all the noise and second guessing and that is what is there.

If it can hold above that then good, that is the short term range and mean reversion to 50 D higher likely (ES around 2000).

The DAX reaction was positive after it bounced today. Increased volume but decreased range, might indicate selling being accumulated. If the options expiration is controlled and goes up during/after in the European AM then we may learn a little about dominant players and their intentions and how they are deploying their resources.

DAX_longterm

es_composite_long_term_plain

The ES crushed stops and closed over 1900.

Wednesdays delta of -55k, combined with that of the other large down days in 2016 signify selling is being absorbed. This is important. The fulcrum of this current balance is 1915.

HVN’s from developing value above 1915 are predominantly at 1938 and 1987 – shown in next image:

crop

Next I look at the prior balances on weekly: if we don’t see 1950 chances are we will see > below 1850.

es_weekly_range_plain

On the weekly chart has I have slightly larger zones for balances. As a result the recent distributions for ES is not identical to that in the shorter term daily chart – it still shows 1900/1950 or else area of negative development to 1800

Also, time and volume between instruments is different. DAX outperformed ES in 2015 because of euro weakness and ECB QE.

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