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Good Monday morning!
And there it is! As if the "VOLATILITY AHEAD" sign wasn't enough back on Friday morning BEFORE THE OPEN, exactly what we were warning you about happened and the selloff on Friday was intense and has even picked up incredible steam this morning as futures are getting destroyed in overnight trade. In case you missed it, what we said Friday before the bell rang in the latest Morning Color report.....
"The S&P notched another new all time high yesterday and the buyers still seem to be in la la land. Don't get me wrong, there has been a lot of positive, pro growth news out of the new administration but gap after gap after gap usually leads to some kind of liquidation break. That being said, just keep playing the game to the long side but be on the lookout for any sharp, quick rug pull."
Well once the listed key levels were lost to the downside, that was all she wrote! Markets sold off and downside targets were nailed!!! The buyers failed miserably when I called Friday a "put up or shut up" day!
Also, the incredible sell off this morning is due to the fact that China released what is called "Deep Seek AI" which show implications of cheaper and faster computing while requiring less energy and less CAPEX (Capital Expenditures) than current large language models, especially those delivered by Nvidia. That stock is down over $16 points already this morning.
In the pic and key targets below, because the gap is so large to the downside, I had to show you all a different chart of the ES futures because I couldn't fit what I wanted to into the regular profile pic! I am sorry it is so small but take a screen grab of the pic (you can use the snipping tool or whatever else you have) and enlarge it to your liking. We are so far below targets that I had to find new levels for you this morning. Just know that this kind of gap probably will not be filled for a very long time as Friday's low was 6122 and we are currently trading at 6006! This gap is gigantic and exactly what I have been warning about for some time!
Futures are down over 125 in the S&P and NASDAQ futures are only down 775 at this time, and I say "only" because they were down over 1100 points earlier this morning! Overnight inventory is 100% net short and the entire game has now changed hands to the bears. We currently are getting an oversold bounce as domestic traders are stepping in to get price back up, so let's see if the upside targets can even be hit. There will be incredible volatility today so please be careful Most people should be sitting on hands on a day like today but if you are going to trade, widen out your stops but also widen out your targets!! We will get huge moves intraday! Futures are trading @ 6006 at the time of this writing.
VPOC Update: No new VPOC's were added on Friday, however, another one was taken out above @ 6154.50, so now there is only one left above @ 6171. We still have 31 below but with this huge gap lower, the several VPOC's that were below price will now be above.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 6050 - 6060
Key Levels: 6026.50 Overnight 1/2 back
downside target is: 5955 - 5945
/NQ upside target is: 21,420 - 21,470 then 21,675
Key Level: 21,521
downside target is : 21,00 - 21,050
/RTY upside target is: 2310 - 2320
downside target is: 2285 - 2275
Economic Data: Light Today
New Home Sales @ 10:00 AM EST
Dallas FED Manufacturing Survey @ 10:30 AM EST
More Color....... By Analyst Rich Rickus
Be back soon!
Have an excellent day!
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