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Good morning everyone and Happy Friday!
Well the bulls and bears were at it again yesterday, squaring off and butting heads, and the bulls defended their territory with authority!!!
Wednesday's late day short squeeze, and the huge gap higher yesterday morning, created the perfect storm!!! Those two occurrences had the sellers on their heels, and even with a few liquidation breaks during the day, shorts scrambled to cover and natural buyers stepped back in and continued with their buying operations.
The DOW (/YM), SPX (/ES) and NASDAQ (/NQ) hit new intraday highs around 3:00 PM EST and never looked back. The RUT (/RTY) small caps did not but did close the day higher.
Anyway I mentioned yesterday.....
"There seems to be this magical, never ending bid in the markets and buyers just come out of the woodwork to support and prop the market back up."
And yesterday, that "magic" was all about two things...large cap tech... i.e. AAPL, META, MSFT, GOOGL and the semiconductor chip stocks i.e. (SMH), TSM (Taiwan Semi), AVGO (Broadcom), AMD (Advance Micro Devices), MU (Micron Technology), and of course NVDA which is up again this morning to new all time highs!
All that being said, the other very important fact that both the /ES and /NQ's managed to stay outside of yesterdays range and close well above prior days highs was a huge tell! Also, a few more important data points:
1.) Value building back higher after going lower for three days and we are testing those December 28th highs in the /ES @ 4840 (hence my target zone).
2.) TWO VPOC's were taken out above...4798 and 4816.50, and yet another new one was put in below at 4765. We now stand with 13 untested points of control below us!!! (That is very stretched and far outside of the norm.)
All of this tells me that the bulls are right back in control! That two day sell off was short lived and we are right back in fantasy land!!! (Picture unicorns and rainbows everywhere!)
(Remember...always ask yourself....who is happy? who is sad? who is making money and who is losing money?!?!)
As we noted yesterday.....
"please be VERY fluid with this market.....intraday short term longs and shorts are getting crushed right now if they don't act and switch sides and only the most nimble will survive this price action!!!!
Also, those three data points mentioned yesterday, which were more bearish then bullish, have all been corrected in one day and now we are off to the races again this morning!!!!
As mentioned.....
"The bearish slant for the moment is showing me that the sellers are still trying and evidence of this analysis comes in no less than **three important data points and facts to consider......however, with this gap higher this morning, we could flip right back to the buy side."
**In case you missed those three data points and want to review them, here is the link to yesterdays Morning Color. https://conta.cc/4b3evfm
(and by the way each issue is archived under tbe Morning Color tab on our website)
Futures are sharply higher this morning with overnight inventory almost 100% net long and on a true gap outside of prior days range as well. We are opening very close to or at my intraday targets so be on the lookout for a possible liquidation break lower to balance out the overnight long inventory. By the way, if we do not break lower then that is a very bullish sign....use the opening print and overnight highs as key lines in the sand.....long above or short below then as always monitor for continuation!
/ES upside target is: 4835-40
downside target is: 4785-80
/NQ upside target is: 17,220-230
downside target is: 17,025-000
/RTY upside target is: 1954-56
downside target is: 1914-12
Economic Data Today:
Existing Home Sales @ 10:00 AM EST *Red Star Event
Consumer Sentiment @ 10:00 AM EST
Baker Hughes Rig Count @ 1:00 PM EST
Michael Barr (Vice Chair of the FED) Speaking at 1:00 PM EST
Mary Daly (San Francisco FED Pres) Speaking at 4:15 PM EST (after market hours)
More Color.......
/ES - Consolidating inside Key Supply HOD at $4810-$4840. Looking to play break and
retests or pull backs after breakouts until one these areas flips ( Supply to Demand)
- If price fails to hold back above $4800 I will look to Play short
- Sellers at the open pushing price below $$4800 and holding on a pull back I will
look to play short targeting$4770 first the $4760
SPY - Consolidating inside at Supply $$477-$479 (Key Demand at $470-$472
- Sellers at the open pushing price below $475 I will look for a break and retest to
play short targeting $473.88 first then $472
- Sellers at the open with bulls defending above $475 and I look to play long
SPX - Consolidating inside Supply HOD at $4805- $4790 with Key Demand at
$4709-$472. If price can pull back and hold above $4760 I will like to play long
- Sell off below $4760 with it pulling back failing to hold above $4770 I will look to
play short targeting $4745 first then Key Demand at $4720
/NQ - Supply flipped to Demand at $16650-$16700 with old Supply at $17050-100
QQQ - New HOD overnight with Supply flipping to Demand at $410-412. If price can
pull back and hold above I will look to play long targeting $412 first then a new HOD
- Sellers pushing price below $409 with it failing to reclaim and hold above $410
I will look to play short targeting $408
TSLA Only interested in playing short from a pullback below $222, ideally $216 down
trendline to play short targeting a new LOD. Bulls want to reclaim above $225
AMD Looking to play long on pullbacks. Selling at the open pushing price back to $162
- If it can hold as support I will look to play long if price falls below that the next line
of support Bulls want to defend is $156, below that leaves room to the downside.
Have a great trading day and a wonderful weekend!
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