An Autopsy of Lowest Selling Pressure EVER: S&P 500, NASDAQ 100 and DJIA Futures DataViz

E-mini S&P 500 Futures (ES)

 

Based on candlestick wick analysis and data across all three primary US futures contracts, there is less selling pressure than ever before.

Not since xyz, not since insert year here... there is less selling pressure than ever.  But everything"s awesome, right?  Just BTFD, right?

If "real technical analysis" was stranded on a desert island with only one wish: #RealTA would ask for candlesticks.  And currently there is a complete and utter lack of top wicks – more so than ever before in the history of ES, YM, and NQ futures. The relentless rally of the past 75 trading sessions has resulted in the lowest 50-day, 100-day, 200-day, and 500-day totals of bottom wicks since ES futures began trading.

So, while volatility and average true range have been missing (read as: kidnapped), so has any semblance of selling pressure; and the top wicks that indicate it.

Aside from an unexpected flash crash type scenario, futures are unlikely to plot a long-term or short-term top without indication of waning buying pressure and/or intensified selling pressure.  At some point in the central bank liquidity orgy flow induced future, all this buying pressure will exhaust itself and we will likely see evidence of an actionable top – in the form of increased frequency and size of top wicks – indicating that selling pressure has arrived (read as: awoken from a morphine overdose induced coma) and that equity "markets" are finally ready to chill.

 

 

 

 

 

Here is another astonishing datavizualization of market structure and ES volume, courtesty of dataviz legend @nanexllc... starting at 11am during the 12/01 session, S&P 500 futures registered record-breaking volume by trading more contracts during that hour than at any other since at least 2005. 

 

The hour beginning at 11am last Friday had the highest $Volume traded in S&P500 futures since at least 2005. 2nd highest was flash crash. $ES_F pic.twitter.com/m9MikNo4H6

— Eric Scott Hunsader (@nanexllc) December 4, 2017

 

 

Is today’s session a bearish omen of an impending correction? 

 

While theoretically possible from a technical perspective: fishing for a top, on the same day that new highs are made, is unlikely ever wise.  Nevertheless, today’s session (12/4) gave us @Fibozachi a very interesting trio of bearish candlesticks for the S&P-500, NDX and DJIA that are each noteworthy. 

 

 

E-mini NASDAQ-100 Futures (NQ)

 

NASDAQ-100 futures (NQ) plotted a large bearish engulfing candlestick; where it’s real body engulfed that of the past two trading sessions.  Because we saw this same candlestick pattern on 11/29, today’s price action confirms that the NDX’ short-term technical outlook is becoming increasingly bearish.  If selling pressure continues, the first short-term downside support speedbump for NQ will be found at 6,200... from there, there is a strong support shelf that spans 6,150 - 6k. 

 

 

 

 

E-mini DJIA Futures (YM)

 

DJIA futures (YM) plotted a shooting star candlestick, meaning:

1. it opened higher than yesterday...


2. traded up to new highs.. and


3. then came back down to close at almost the same exact price as the open.

 

12/4’s YM session also registered as a filled white candlestick; meaning that while YM closed higher than yesterday’s close, that it also closed below yesterday’s open.

When a shooting star candle plots after a strong rally, it is often a warning sign that bullish momentum may be exhausted; the opposite is also true for hollow red candles after a sell-off.

While additional confirmation is required, this is the type of bearish candlestick pattern that may seem obvious in retrospect when looking for signs of a market top.  If selling pressure continues, short-term downside targets are 23,600 with a strong support shelf at 23,200. 

 

 

 

 

E-mini S&P 500 Futures (ES)

 

S&P 500 futures (ES) plotted a bearish engulfing candlestick pattern for the first time in 4 months.  This type of pattern - after such^ a relentless rally - has an increased chance of follow-through ... though in this instance it may just lead to a short-term sentiment reset rather than a legitimate sell-off.  If selling pressure continues, short-term downside targets span 2,550 to 2,600.

 

 

 

 

Volatility Index Futures (VX)

 

VIX futures (VX) plotted a bullish engulfing candlestick pattern for the first time since 8/08/17.  The last daily instance of this pattern triggered a surge that sent $VIX #PriceAction from 16.50 to 19.45 in just 3 sessions.

Today’s instance (12/4) provides additional technical evidence that major US equity ‘markets’ may be topping.  Should VX futures continue to rally... they will likely retest 13.50 before encountering genuinely firm resistance at 14.70 - 15.00.. with extremely strong resistance at 16.50.

 

 

 

Check out Fibozachi.com to learn about modern technical analysis and trading indicators that actually work.

Future’s have Less Selling Pressure than Ever Before… until now?

JPM Short Circuits & Banks Bump Up Into a Glass Ceiling as Semis Soar, Bitcoin Blasts & Block-Brain'd Sir Jamie Eats Crypto Crow

JP Morgan (JPM)

Having notched an all-time high by closing at 97.35 on 10/3, JPM appeared to be consolidating over the next 6 sessions - in preparation for another surge higher. But 10/12’s Q3 earnings release session suggests that immediate bullish momentum may have been exhausted and, with it, Sir Jamie’s next (ever-so-lovable and antithetically Populist) all-time high “I’m richer than you” quip has been - akin to PM Jordan"s Bitcoin prop traders - placed in limbic limbo.

With the close of the 10/12 session, JPM:

1. registered a bearish engulfing daily candlestick pattern;


2. on heavy volume;


3. after a rally, sideways chop, and doji on the previous daily bar.

This is short-term bearish. JPM’s 10/12 session, also: 

1. registered the largest daily volume since 7/14; and


2. exhibited the largest daily trading range since 9/7 – the swing low that preceded this 10+% rally.

Technically speaking, JP Morgan"s 10/12 session was unabashedly bearish.

But being just shy of an all-time high …

and without a confluence of technical signals to suggest a significant inflection to the down ..

pre-emptive calls for a top in JPM"s price action should be met with a great grain of salt.

What is JP Morgan’s bottom line?  All-time highs (ATHs) beget more all-time highs.

Even if you are a PM Jordan bear (for #SirJamie"sGeniusDaughter or other non-technical reasons), you should not position for a substantial price inflection, prior to:

1. an upside retest, where JPM fails to register a new high; and, then


2. a breakdown that closes below the preceding 9/7 swing low of 88.08.

JPM’s strongest support (and 1^st downside target) surrounds round number 94, where a small open gap remains unfilled. Should John Pierpont slump (and close) below 94, strong support levels will show themselves just above 90 and 88.

  

VanEck Vectors Semiconductor ETF (SMH)

The daily chart of VanEck’ Semiconductor ETF (SMH) clearly - and unmistakably - shows a Super MACD, Super RSI, and Super Stochastics that have each zoomed up, up, and away – into dynamic overbought territory. This confluence of technical developments is noteworthy because our Dynamic OB/OS Levels (DOBOS™) adapt to price action, rather than simply remaining static. This results in indicator value levels that often prove much stricter than the pre-set values that your ‘textbook’ suggests (and discount broker pre-populates); i.e. a stock RSI setting of 70/30, Stochastics at 80/20.

The last time the SMH daily chart exhibited Super MACD, Super RSI and Super Stochastics readings with such elevated values (~ all swimming deep in overbought waters) was just prior to the 6/8 semiconductor swing high top. And for good measure, the last time these 3 Indicators were oversold in unison was at SMH"s 4/17 and 7/3 swing low bottoms.

While a sample size of just ‘3’ instances is not statistically significant .... 

that the Super MACD, Super RSI, and Super Stochastics have all drifted into dynamically overbought territory ...

while price has paused in place, after a relatively relentless move higher without so much as a single sizable dip ..

ought give Semi bulls good reason to tighten their stops; if they are not amenable to taking partial position profits here and now (now that their winner has ran, and ran and ran so).

Semi"s bottom line?

A downside retracement for SMH would pause first around 93; then dead-cat bounce back above 94 ½ before testing round number 90 on the down. Should such a simple ABC downward retrace occur, technicians would be wise to pay particular attention to the character of price action - i.e. "how" it responds - upon dipping down into the strong lateral support shelf that spans 89 – 90.

Chicago Mercantile Exchange’s Real-Time Bitcoin Index ($BRTI)

Despite a well-defined penchant for monstrous rallies, Bitcoin’s 60-minute chart shows that it entered into overbought territory on 10/12 on both the Super RSI and Super MACD. Employing Dynamic OB/OS Levels that adapt to price action allows users to acurarately gauge when price is truly exhausted and likely about to correct | reverse. 

The last time that Bitcoin ($BRTI) witnessed the Super RSI and Super MACD above their Dynamic OverBought Levels was back on 9/18, at the $4,112 high – the last hurrah of a swing high, directly before a downward correction that ended four days and -14.4% later at $3,520.

If Bitcoin is ready to take a well-deserved breather next week, support will not come into play until $4,800. And while a circa 15% downswing (after a 15%⁺ up day!) will not phase those who are HODLing, our central aim as market technicians is to identify and diagnose asymmetric risk:reward technical setups; so that, as traders, we can most effectively execute entries | exits and efficiently manage those positions.

To wit, a pullback that successfully finds support at and rounds back up from the $4,800 - $4,900 zone (~ the 10/12 breakout zone) would be a fine spot to enter or further build upon an existing position (with a clearly defined stop just above $4,700, to explicitly define position risk).

KBW Nasdaq Bank Index (BKX)

Similar in technical profile to Semis (SMH), the Nasdaq Bank Index" daily chart shows a Super RSI and Super Stochastics that are both above their Dynamic OverBought Levels. Coupled with the first flash of a daily sell signal since the 99.77 BKX swing high of 3/1, we would be very leery of getting too far out over our Nasdaq Bank Index’ skis if long BKX here.

BKX bottom line:

much like Banks" NIM not moving higher .. while price action may push yet a touch higher (c. 101-103), BKX bulls should remain on high alert with respect to the unfilled gap at 97.27; and, if BKX closes anywhere under 96, then their focus ought immediately shift to the Bank Index’ baby gap at 93.81.

Happy Friday the 13^th, fellow MindHunters!

For more technical analysis:

NFLX Won"t Chill: Where to Next

FX Technicals: Is the US Dollar"s Down Done?

Learn The Rules Like a Pro, So You Can Break Them Like an Artist 

Check out Fibozachi.com to learn about modern technical analysis and trading indicators that actually work.