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Good Monday morning,
Well, as we have been saying over the past few days last week, the markets were getting stretched and were due for a pullback/liquidation break, and poof, here it is! And all it took was a late day call Friday afternoon at 4:45 p.m. EST out of Moody's which downgraded the U.S debt rating! Are you kidding me?! Talk about a sneaky and dirty stunt. Pulling this sort of thing at that time of the day/week is criminal in my eyes, but hey, they don't care what I think- or the millions of other investors who got screwed by these shenanigans, but it's something we all have to deal with at the moment.
In the profile pic and key levels below, you can see that the price is gapping below Friday's range and overnight inventory is 100% net short. As always, whenever there is a true gap and overnight inventory is 100% net short (or net long) we will be looking for a fade (meaning opposite direction of the gap). The first setup is a look below and fail at the overnight low, which currently sits at 5892.75. The second setup is a move over the first one minute high, with the stop below the one minute low. If price starts to fade higher, then trail the stop to breakeven as soon as possible, then look for the first target which is the gap fill to Friday's low at 5924.75. If price continues to lift then the next target is the VAL at 5941.25, then the overnight high and Friday's half back half back around 5948-5951. POC and upper targets would be next!
If sellers keep the pressure on and the price stays below Friday's range, then the edge will swing to the bears and we need to look for lower targets. The first downside target is a retest of the overnight low, which is 5892.75, then look for 5870-5855. If further selling persists, then the next stop would be 5830-5820.
Futures are currently trading at 5915 as of this writing.
VPOC Update: No new VPOC's were added or taken out Friday. We still have 5 above and 20 below. Closest one above is 6006 and below 5854.50.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5970 - 5990
Key Levels: 5924.75 Prior low
downside target is: 5870 - 5855 then 5830-5820
/NQ upside target is: 21,400 - 21,450
Key Level: 21,265 Overnight half back then 21,320 Friday's low
downside target is : 21,000 - 20,970
/RTY upside target is: 2110 - 2120
downside target is: 2075 - 2070
Economic Data:
E-Commerce Retail Sales @ 10:00 AM ET
Leading Indicators @ 10:00 AM ET
3-Month Bill Auction @ 11:30 AM ET
6-Month Bill Auction @ 11:30 AM ET
Lorie Logan Speaks @ 1:15 PM ET
Neel Kashkari Speaks @ 1:30 PM ET
More Color By : Rich Rickus
- /ES - Key Demand $5815 - 5805 then at $5720 with Supply at 5997
Bullish : Sellers trapped above $5730 looking to play a break and retest above $5740 long targeting $5780 then $5800
Bearish Buyers trapped below $56003 looking to play short after a break and retest below $5595 targeting $5560 then a break down into $5550s
- SPY Key demand at then at $560-561 with Supply above at $570
Bullish Sellers trapped above $561 looking to play a break and retest from $562 long targeting $564 then a breakout mid high $565s
Bearish Buyers trapped below $560 after a break and retest below $559 targeting $557’s then a breakdown into $556’s
- /NQ Key demand at $19900 with Supply above at $20276
Bullish Sellers trapped above $19800 looking to play a break and retest above $19850 long targeting $19900s then a breakout back into low $20100’s
Bearish Buyers trapped below $19900 looking to play short from below $19850 targeting $19700 then $19650
- QQQ Key Demand at $476-478 then at $484 with Supply at $492
Bullish Sellers trapped above $484 looking to play a break and retest from $485 targeting $487 then a breakout into low mid $488’s
Have a great day!
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