With overnight inventory being 100% long from Wednesday’s close, the market opened Thursday at the low end of Wednesday’s upper distribution but failed initially to find price acceptance back in that distribution.

Liquidation then followed after entering back into Wednesday’s lower distribution, one time framing lower to and through Monday’s very prominent point of control. The initiated selling in B period, however, began almost exactly from the current day and overnight half-back level, meaning weaker type short term market participants were in control. The market subsequently short covered back into Wednesday’s range.

Just when you think crude and the ES are de-coupled, today’s daily charts are very similar. Short term traders need something to lean on for momentum, so following crude oil looks like the easy trade for the momentum players. When crude broke, the ES followed, when crude short covered, the ES followed.

Both Wednesday and Thursday showed declining NYSE volume, proving the continued absence of longer term traders.

Moving forward for Friday, Thursday’s selling left a week low just one tick above Monday’s low. The subsequent rally high at 2066.50 could prove to be an important reference point for Friday. The late pullback low in J and M periods exactly to Thursday’s low are also questionable, as they are at a very visual reference. Look at least for those areas to be retested if the market opens above.

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