Morning Color

April 23, 2025

Good Wednesday morning!

What a difference a day makes, as the market has bounced hard and made a 180-degree reversal from the Monday session beating. The DOW got back all of the 900+ point loss as it tacked on over 1,000 points yesterday! We truly hope you took advantage of the key levels and targets, as they were absolute gold yesterday. As we mentioned in Morning Color yesterday....

"If price can stay above 5194, then the edge should remain with the bulls. Also, keep an eye on overnight 1/2 back which is at 5214. That is another indicator who is winning the battle once the opening bell rings. Now if tempo and momentum continue to the upside and upper targets are hit, we could be going to 5315 then possibly 5355 if the shorts get squeezed hard today. "

Those key levels held, and upper targets and extended targets were hit! Yesterday's high was 5339.25!

This morning, we are seeing a large follow through gap higher as futures are up across the board. Price has also filled a gap going back to the April 15th lows at 5420. This level will be important moving forward.

In the key levels and profile pic below (and sorry for the small print but I had a lot to show you!), if buyers keep price above 5420, then the edge remains firmly with the bulls. Look for upper targets at 5445-5465 then 5515-5520. Any break back below that level of 5420, then look for a retracement to the April 16th high at 5402, then the overnight low at 5377. Any further break below 5377 we would look for a gap fill back to yesterday's high at 5339.25, then the POC at 5315, then lower targets.

Honestly, with this gap higher today, I think the probability of going back down to prior day's range is very low. Shorts are scrambling to cover, and traders and investors around the globe are back on the buy side!

N.B. Overnight inventory is 100% net long and we have a true gap outside of prior day's range, so there is a possible trade set-up to fade lower first to balance out the long inventory. Use a look above and fail at the overnight high, or a break of the first one minute low for a possible short trade. Even if this does happen, I will be looking to buy the dips! Futures are trading at 5454 at the time of this writing.

VPOC Update: The large move yesterday took out the new VPOC above at 5325 and we added a new one below at 5184! 5430 is also in play today, although we are currently trading above that level at the time of this writing. We currently have 8 above and 14 below.

TARGETS AND KEY LEVELS TO WATCH:

/ES upside target is: 5445 - 5465 then 5515 - 5520

Key Level: 5420 Gap fill to 4/15 then 5402 then 5377 ON Low

downside target is: 5275 - 5250

/NQ upside target is: 19,000 - 19,050 then 19,150 - 19,200

Key Level: 18,884 Gap fill to 4/15

downside target is : 18,750 - 18,700 then 18,625

/RTY upside target is: 1960 - 1970

downside target is: 1870 - 1850

Economic Data: Red Star Event

MBA Mortgage Applications @ 7:00 AM ET

Austan Goolsbee Speaks @ 9:00 AM ET