Short term traders were once again in control of the ES on Friday, as evident by the very mechanical nature of price trading off of exacting levels and low volume (NYSE daily volume at just over 3 billion).

After opening slightly above the previous day’s high and setting another new all time pit session high in the ES at 2164.25, price quickly sold back into the previous day’s range. The short term traders destination would be the opposite end of the balance, in this case the previous day’s poor low at 2152.75.

The first sign of mechanical selling appeared late inside A period when price bounced to the exact half back level at 2161.50, to the tick, then driving price lower in B period to exactly at the overnight session half back level of 2156.75. Price bounced from there again to the floating half back level at 2161, and sold lower again.

C period formed a small inside bar that D period sold through forming a second, lower distribution.

The market was timeframing lower for the first eight 30 minute periods, initially stopping just 3 ticks shy of filling the gap from the previous two day balance from 7/12, 7/13 in E/F periods (mechanical buying above gap), then reentered the previous two day balance in G period.

Price was not accepted back into the prior balance and chopped around above it, back and forth through Thursday’s low. The early 4 wide POC at 2158.50 dropped 5 points lower to 2053 in H period, and ended the session 9 wide at 2154. Value also migrated lower throughout the session, ending the day overlapping to lower.

The late recovery rally ended in M period (which closed the double distibution) when more mechanical selling came in at just one tick below the previous day’s close at 2157.25, driving price lower to close at 2152.50, one tick below the previous day’s low making it an outside day.

After the regular session ended the ES sold off another 9 points on news reports of the Turkish military uprising.

This was another day dominated by day and short term traders. With all the external events happening in the world and with global, electronic trading you never know where the market will open up after the weekend. If the ES opens within range the weak, mechanical references sold from on Friday could be revisited, at some point. If the market gaps open lower, the low of the previous two day balance and wide POC from 7/11 are valid references, if it opens with a gap higher the all time high made in the after hours market at 2168 could be revisited.

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