Morning Color

February 2, 2024

Good Friday morning.

Well that didn't last long. The storm clouds have parted and the sun is shining on the bulls once again!!!

Selling pressure from Wednesday was absorbed and the /ES held that very important 4875 level shown in the profile picture yesterday. Initially, buyers seem to step back in on the news that "Israel and Hamas have agreed to a ceasefire" according to Reuters, however, those were apparently just rumors and were deemed false according to the reporting agency.

Even as news broke that the report was indeed false, traders managed to take the market to new highs late yesterday afternoon as the battle in the Middle East raged on. I actually think the strength was not so much on the news from Israel and Hamas, rather investors were very optimistic about the earnings reports from AAPL, AMZN and META which all reported yesterday after the close. Somebody obviously knew something!!!!!

Please always remember the stock market is NOT a level playing field. The big firms and institutions ALWAYS get information and "color" ahead of the rest of us. So as yourself..."Why were they buying aggressively ahead of the close and ahead of the earnings reports?!?!" hhmmmm I guess they were just lucky and rolled the dice! LOL (If you believe that I have a bridge to sell you!!)

Now even though I mentioned I was looking to get more to the short side, as I wrote yesterday, i did say so with a few words of caution....

"If we lose 4875, then 4860-4850 would be the next target levels in the short term. At that point, in my opinion, the tone and trend of the markets will have definitely changed and there are a lot of people trapped above! We are NOT at panic levels yet but the writing is starting to appear on the wall. Again, where we close today and where value develops will be key so lets see just how confident the bulls are today."

Also....

"In the profile pic below, I have once again marked off the very important levels to watch, and as you can see, we lost several key support levels and as long as we stay below 4910-4905, then the sellers could take back control."

Well the bulls proved their mettle once again and returned to their buying operations and took the markets back up well above 4905-10. This is certainly becoming tricky to navigate as the rotation from bullish to bearish and back to bullish again can seemingly come out of nowhere! I have been doing this a for quite a while and this is certainly one of the most difficult markets to trade that I have seen in a long time.

I am not making excuses, and I have said many times that I do not have a crystal ball, but I have learned to stay very fluid with the market, and that is exactly why I give you the key levels to watch. If we stay below certain levels, then sellers are in control. If we break back above certain levels, then the buyers are back in control. You MUST pay attention to these things and also, once again, where value develops and where the market closes in relation to that value is extremely important!

The triple top we marked off has now been taken out and if we can mange to close above those highs, around 4957, then there are clear skies ahead once again for the bulls. If we close back below those levels, then we will have to wait until next week for the potential break higher. (That after all is the path of least resistance right now!)

Futures are much higher this morning after the earnings reports and it is now a true gap outside of prior days range. If we do fade at the open (meaning go lower) then target yesterdays high at 4945.50. The next downside target would be 4935-4930. PLEASE NOTE: The Non Farm Payroll numbers just came out and futures are pulling back at the moment. The fade move lower has now become much trickier and is most likely off the table when the bell rings at 9:30.

No new VPOC's so we still have one above us @ 4950 and we still sit with 14 untested points of control below us.

/ES upside target is: 4955-65

downside target is: 4930-20

/NQ upside target is: 17,575-600

downside target is: 17,490-470

/RTY upside target is: 2010-12

downside target is: 1985-80

Economic Data Today:

Employment Report @ 8:30 AM EST

Consumer Sentiment @ 10:00 AM EST

Factory Orders @ 10:00 AM EST

Baker Hughes Rig Count @ 1:00 PM EST