S&P futures saw selling pressure early Monday morning, which makes for another potential buying opportunity ahead.
Prices Rejected Above 2000
The E-Mini S&P 500 [CME: ESZ14] futures has attempted to establish acceptance above the psychologically important 2000 level throughout the month of September, but has failed all month. This actually makes sense given the aggressive trending price behavior seen the previous month in August. That is, after trending months you typically see a month where price trades within a range, which is what’s happening for the most part right now.
The latest failure to hold above 2000 led to a steady mark down during Monday’s trading, as price reached lows of 1982.50 after being as high as 2003 in overnight trading. However, as we know all too well, every sell-off has offered a great buying opportunity for new highs, which has been the pattern for nearly two years.
Buyers to Defend LVN
Given the failure to expand the range beyond 2000, we could see more near-term weakness ahead, likely to the next area of rejection below, which is 1972.50 to 1977.50. This 5-point range is a clear low volume node (LVN) in the composite volume profile, which offers an easy way to spot prices that have been rejected by the market.
Generally speaking, responsive buyers will lean on LVNs as support when executing new orders during a trending market, so look for higher timeframe swing buyers to defend 1972.50 to 1977.50 for a shot at 2025.50 to 2030 by the end of the month.
The Bear Plan
Short term, the Bears are getting fed after successfully keeping prices offered above 2000. Sellers will want to keep MCVPOC offered at 1987.25, but will also look to defend any pullback into 1995 to 2000 for a shot at new lows to 1961.25, which is the next high volume node (HVN) below.
Cheers!
Frank Ochoa
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