Debrief · 20 June 2022 · Juneteenth: pick the obvious spot, then a gap and go

The holiday sessionA very quiet session yesterday, perhaps given the lack of overall direction into the OPEX close and the fact that markets were officially closed. The initial positive Sunday open saw a test of 3708. A failure to look above saw sellers reverse the auction through the previous close and Friday's VPOC at 3675 before finding buyers at 3661.25. The auction has since ground higher, finding some resistance and profit-taking at the notable reference points 3712, 3723, 3741 and 3750 (composite HVN). Please review the weekend notes in the weekly analysis.

The open, 08.30 CTBuyers immediately step in on the open, and NQ and ES quickly advance to the prior week's HVN at 3775: an impulse higher from the open, with large orders above the ON high. This is a typical gap-and-go response on the open. The market shows its intent from the very first second of the opening. The box on the footprint highlights an area to assess and look for an opportunity to enter, with risk either side of the box. Long positioning then exits at the prior week's HVN 3775 area, and delta drops as longs exit positions.

Mid-session, 11.30 CTA PB from the high to the session mid and FS VWAP, to a low of 3757.25. Not much to talk about post open. As I write this, the market has formed a P distribution, which is typical of a short-covering rally. There was one notable PB from the early highs at 3781 that found buyers just below the VWAP and session mid at 3757. PA into this area was slow and hard to gauge, and there was very little increase in volume into VWAP to confirm buyers were ready to hold the area.

Moreover, the bounce came from the earlier zipper off the open: the PB was to the top of the zipper and the range mid.

Once the PB from the initial high at 3781 down to 3757 is complete, you need to be thinking this is going to balance on top, forming a P distribution. Also, this is a short-covering rally: the spike base at 3757.25 must be observed into tomorrow.

The close, 1500Into the close, the auction rotates back through the POC to close at 3665. I will be observing the close for a push down to the spike base formed at 3757. Buyers will need to protect this area.

Holiday tradeStops in ES through 3723. An instant reaction from sellers in this holiday market. Is that hunting? I find that in holiday markets you need to pick the most obvious spots and look for the reaction. If you play in the middle, you will get run over. Risk at the high.

3723 was an obvious area to trade. The reaction was exactly what I wanted to see, and now it's in the lap of the gods. Look back to Memorial Day and the overnight grind to the century, 4202, on 30/5.

I think it's OK to trade holidays if you can pick your spot and maintain your discipline. The spots that everyone is looking at are usually the best. 3723 was clearly mentioned in my weekend prep, sent out on Saturday. What I am trying to show is that I had a plan, I saw what I wanted to see, and I executed it without hesitation. Whether the trade now works or not, I don't care: I will be in the garden. Have a good Juneteenth.

UpdateStops up to 3741. Stops triggered up to the HVN ledge at 3741. Similar to yesterday's pop up to the 3723 area, longs use the key reference 3741 to exit positions. This is just position adjusting: the PB from 3741 ran down to 3720 as people chase price lower, before the auction reverts to trend.

TodayNo trade taken in ES. I favoured a long set-up in RTY, which gave me a little more time to assess the picture.

On the 11.30 CT pull-back to 3757.25 I missed my entry at 57. The profile set-up: entry criteria PB to VWAP, volume increasing, sellers not managing to slice through, and confluence of the IB mid, VWAP and the prior zipper post open.

Refer to the weekend homework for HTF levels and analysis.

Today is information day: usually a Monday, but there was a holiday.

Today we will probably open with a large gap out of range, ending the OTFD on the daily, and we will be looking for clues of acceptance or rejection on the open. ON inventory is very long, and I will be monitoring for an adjustment into or at the open. Buyers will need to show some initiative early to cement these gains.

MonitoringMost important will be Friday's high and the high from last week's lower distribution extreme, 3712. I will be monitoring for a test back, given the large ON and holiday gains. The question today is whether buyers can maintain these holiday gains, currently up 1.6% from the prior close of 3679. A successful hold of this area will target higher, and the HVN from last week's profile at 3775.

Or: an open impulse up to 3741 and 3749 fails, for a short back to 3712.

A drop back through 3712 will, in my opinion, see weekend longs liquidate lower and see us retest the previous close at 3679 and the VPOC at 3675. Buyers will need to respond there to avoid another test of the yearly low of 3639.

ON (including yesterday's PA): trend, short covering, trading inside last week's upper distribution (3712-3878.5).

ON: H 3749 | L 3661.5 | VPOC 3734 | VWAP 3711 | PRIOR CLOSE 3679