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.
— 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:
- it opened higher than yesterday…
- traded up to new highs.. and
- 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.
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Future’s have Less Selling Pressure than Ever Before… until now?