Daily Plan 12.27.23
Welcome back everyone!
Today's session was noticeably slower, with only a slight move to the upside above the Value Area High (VAH) on both the Emini and Nasdaq. Overall, there isn't much to discuss about a session characterized by limited volatility.
In contrast, the oil market experienced a robust rally, surging above a key long-level threshold and gaining over 150 points in the upside direction, ultimately reaching the long-term target.
On the stock side of things, only AMD and TSLA exhibited significant continuation moves after breaking through the long-level thresholds. Most of the market, however, remained rather subdued today, primarily due to the stagnation of indices.
One noteworthy observation is the buildup of short positions on the Nasdaq, which could be an indicator of an impending sell-off. While the Commitment of Traders (COT) report doesn't specify how far a move is likely to go, it has proven to be a valuable resource for capitalizing on opportunities throughout the year. What has caught my attention is the fact that Commercials are currently the most short they have been all year. This suggests that the rally may be losing steam, as the desired buying activity is lacking. Additionally, the tech sector has started to stall in its upward movement and remains range-bound for the most part, with only a few exceptions. I anticipate that in the near future, possibly within the next 1-3 months, we may witness a sell-off that takes us back below the 15,000 mark. A key sign of the selling pressure subsiding will be when Commercials start to unwind their short positions. I will closely monitor this development and provide updates in the coming weeks. Overall, if I were to pick an index to short in anticipation of a sell-off, the Nasdaq would be the most favorable choice based on its current positioning.
Now, let's transition to the volume profile setup on the Emini for tomorrow and continue with the analysis for the upcoming session!
Breaking Down the Profile
S&P500 (ES)
