ES and NQ moved higher as expected last week into ever declining composite inventory. While not something we look at everyday, it’s important to stay aware of the larger picture. See below the aVP from the November lows. The most significant high volume node is below near 4800.
Review of last week:
- ES: Weekly expected high of 5050 was achieved after an early liquidation tested below the key 4916 price and was unable to accept below 4875. With acceptance back above 4950 the auction was clear to move to the 5050 target. SPX tagged 5K for the first time! LT composite picture is one of declining participation at higher prices and broad complacency in the VIX curve.
- NQ: 17590 was key for the week. Auction pushed to the 18K target after early week liquidations tested and failed to gain acceptance below our key 17590 level. Auction migrated 5D up to 17850 and pushed into new monthly ranges and end of week drift higher after 2 treasury auctions failed to bring any more volatility.
- RTY: We came into the week in a balance posture, and expecting a move from 1983. Sellers did get new low weekly prices as expected but buyers got the auction back above 1983 and we almost engulfed the prior week returning to 2020. We are still inside of January prices, but now above the composite value references.
- CL: We began the week in the middle of the 70-76 range expecting lower prices. We did immediately get lower weekly prices, but those low prices invited buyers who took the auction back to MVWAP buyers stepped in, and instead of rolling over the auction pushed all the way back to the prior weeks VPOC. Auction closed back above the 70 to 76 range.
Expectations for the coming week:
A significant test of equity strength set for the coming week. Several inflation reports and 2 expirations. This combined with the composite ES inventory makes the march higher much more tedious.
- ES: 5013 now key to the auction. We have a weekly expected high of 5107 and we are now above the monthly expected high at 5035.
- Expecting higher prices at least early in the week with CPI, VIX expiration, PPI and OPEX we are likely to see balance, and or liquidation in the latter half of the week.
- If liquidation becomes significant moved to 4800 is possible.
- NQ: Trend day higher to close the week. Composite value lower in a tight range from 17710-17850. Expecting up to 18336. Set to open the week above the monthly high. With 2 key inflation reports and OPEX, the 20D will be key defense.
- If we continue to rally into the inflation report, expect liquidation at the latter half of the week. Best chance for bulls is early weekly liquidation that fails to accept below 17710.
- RTY: New bullish posture to begin the week. 1983 to 1997 is supportive and defense looking for the auction to push toward a test of the yearly opening range. And the monthly expected high of 2060.
- If the yearly opening range is rejected, the auction is likely return back to 1983
- If we accept above 2032 and 2060 and higher.
- CL: 74 key to the auction. 70-76 range also key. Any attempts back into the range should invite buyers to rotate up toward 78 ’23 VPOC and beyond to 81 weekly target higher.
- If buyers fail to hold 70-76 range, then back to 74.
- Accept below 74 and back to 70-71.
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Define your risk and trade well!