The futures contract for the S&P 500, the ES Emini for September, neatly reflects that of the AUD/JPY albeit in a more extreme way, and mirrors the ‘good news bad news’ stories for risk assets such as equities as the US and China continue to trade punches. What can we, therefore, glean from such a chart which is identical to those for YM Emini (Dow Jones future) and the NQ Emini (NQ future)?

First and foremost, it is volume, price action, levels, and volatility. Beginning with volatility note the index continues to trade within the volatility range of the widespread down candle of the 5th August which is to be expected given the brutality of the price action on that day. And we clear the range of this candle further congestion will follow.

Next for any recovery or breakaway volume is the key. Note how the volume during the middle of August fell away as the market rises, a sign of weakness which was followed by the sell-off late last week and a wide spread down candle on Friday with heavy volume.

Moving to yesterday’s price action, once again the rally looks labored and anomalous, with a widespread up candle on ‘low volume’. This looks lightweight when compared with other candles of similar price spread reinforcing the idea of a fragile market lacking conviction and participation. Whilst the summer season will certainly be a factor, what we are seeing is a thin volume response higher and return to the volume point of control ( the yellow dashed line ) at 2885 which is being tested at the time of writing.

And so to levels which are clearly defined. Very strong resistance at 2900 (the blue dashed line of the accumulation and distribution indicator) and working in concert with the volume point of
control itself. Above this is a further level of strong resistance with the red dashed line at 2940 which has been in play several times, capping any advance or breakaway from the VPOC.

Finally to support which sits as a platform in the 2820 region, a springboard for recovery and another which has come into play several times recently.