$ES_F : 1484-1494 : Market Recap

Bullish theme continues. Watch for fatigue.

Markets moved up on very low volume and managed to establish a new high overnight.

As per this trade plan I came in the day with bullish set-up, even though the markets are showing signs of fatigue on resistance levels. Today was again a very low volume session indicating some fatigue building up on resistance levels. Till now there is only one 5 minute bar with 40,000 emini contracts. VIX spot was once again under pressure making a new lows and but 3 m spread is flattening slightly to 2.90 after debt ceiling can was kicked down the road. After making overnight new high of 1491.25, markets had a bearish bias at open and an overnight intra day short set-up was in play so I was expecting markets to trade in 1484/82 support zone before a long side move starts. However the selling stopped at 1484.5 two ticks above minor support and the subsequent reaction tested the failure of the intra day short set-up. I made a low conviction call to expect that low of the day is in at 1484.50 via this comment.

Markets eventually reached 1491 area giving opportunity to exit long positions. With another 45 minutes remaining, markets can go anywhere but once the up-side is exhausted, I would expect a move down towards 1488 VWAP.

AAPL is reporting earnings today after close and likely to make the overnight session bit volatile after close. A positive surprise would boost not just AAPL but also SPX and vice versa in case of disappointement. Considering all the uncertainty and the flirtation with resistance levels it may not be worthwhile to keep overnight positions.

Day session range so far has been very tight 7 points and day range has been 7. VIX remained near the multi year low level below 13 handle.

The long set-ups are still in play and so far I do not see any short set-up in play or holding more than 1 day. If the earnings disappoint, we might see a sharp break which can establish some short set-ups.