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Good Monday morning,
OUR APOLOGIES FOR THE DELAY THIS MORNING. THERE WERE ISSUES OUT OF OUR CONTROL IN SENDING MORNING COLOR OUT TODAY!
First, some perspective. I have been pretty bullish over the past few weeks, and we have had a big move off of the April lows, so that has been good. As I commented a few times in recent Morning Color issues, the market was due for a pullback, but then got way oversold, so there were tremendous opportunities to buy quality stocks that literally were cut in half! Most of the names I was watching were down 20-30-40%, so that made sense to me to buy the dip!
Well now to put some context on this narrative. From the April 7th lows, the S&P is up 17%, and last week alone the market was up 3%. We also hit our upside targets of 5570 and then 5650 in the S&P cash, so a pullback, or some corrective activity at these levels, makes sense. The market has become too extended (net long) at the moment so the fact that we are seeing some weakness this morning is not surprising at all. Inventory needs to correct a bit.
In the profile pic and key targets below, /ES futures are down -43 points right now, and currently we are very close to a true gap below the prior day's range. The first key level to watch once the opening bell rings is Friday's low at 5663. If price can get stay in the prior day range, above 5663, then we could be looking for a fade higher to 1/2 back and VAL (Value Area Low) at 5695. Further buying could push prices to the POC at 5709, then to the prior day's high at 5724.75, then to the upper targets at 5740-5750.
Now, if the sellers push price below Friday's range, or the move higher stalls and then rolls back over, look for a move to lower targets at 5630 - 5620. We have the overnight low and a VPOC here around 5658, so IF this overnight low and VPOC hold and 5663 is defended, then look for a fade higher!
Futures are trading at 5665 at the time of this writing.
VPOC Update: Another brand new VPOC was added Friday below at 5658 (which is definitely in play this morning), but we also took one out above at 5690, as mentioned that would be on play Friday, so we now have 6 above and 17 below.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5740 - 5750
Key Level: 5663 Friday's low then 1/2 Back and VAL 5695
downside target is: 5630 - 5620
/NQ upside target is: 20,350 - 20,370
Key Level: 20,019.75 Prior day's low
downside target is : 19,950 - 19,910
/RTY upside target is: 2030 - 2040
downside target is: 2010 - 2000
Economic Data: ( Green Star)
PMI Composite Final @ 9:45 AM ET
ISM Services Index @ 10:00 AM ET
Treasury Buyback Announcement (Preliminary) @ 11:00 AM ET
3-Month Bill Auction @ 11:30 AM ET
6-Month Bill Auction @ 11:30 AM ET
3-Yr Note Auction @ 1:00 PM ET
More Color By : Rich Rickus
- /ES - Key Demand $5630 then at $5600 with Supply at $5724- 30
Bullish : Sellers trapped above $5630 looking to play a break and retest above $5640 long targeting $5680 then $5705
Bearish Buyers trapped below $5600 looking to play short after a break and retest below $5590 targeting $5575 then a break down into $5560s
- SPY Key demand at then at $559 with Supply above at $566
Bullish Sellers trapped above $559 looking to play a break and retest from $560 long targeting $561 then a breakout mid high $562s
Bearish Buyers trapped below $559 after a break and retest below $558 targeting $557’s then a breakdown into $555’s
- /NQ Key demand at $19800 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 $19600 looking to play short from below $19550 targeting $19400 then $19300
- QQQ Key Demand at $478-479 with Supply at $487
Bullish Sellers trapped above $478 looking to play a break and retest from $479 targeting $482 then a breakout into low mid $484s
Bearish Buyers trapped below $487 looking to play a break and retest short from $486 targeting $484 then $483s
Have a great day!!
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