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Good Wednesday morning,
Markets gapped higher again yesterday however the follow through was much more subdued and muted versus Friday and Monday. Basically the markets opened higher and just "spun" for most of the day doing what is called "balancing". Volume was low and the range was relatively tight. Buyers and sellers were at a stalemate and buyers were exhausted.
The SPX hit our target @ 5200 as yesterdays high was 5200.23! Not too bad. The market has officially rallied 250 points from the April 19th lows. Now that being said, the market has gotten itself over extended because the market has gapped up three days in a row and this kind of euphoria is NOT sustainable.! We have also added 3 new VPOC's in the same number of days and all this says whoa...too far too fast. The fact that the market got itself too net long AND the upper targets were hit is a perfect set up for a move lower!
That being said, futures are sharply lower this morning on a true gap down below yesterday's range with overnight inventory about 95% net short. We do have decent odds of a least a fade higher at the open to balance out some of the overnight inventory but that is not a guarantee.
Remember, this move lower is because of what was just said above as far as over extension and targets hit, so the important things to gain and take away from today will all be about how bearish does the market get or will the bulls step right back in and prop things back up? Value and whether or not we "fill the gap" (meaning get back to prior days range) will also be a tell for future short term direction. Key levels are listed in the profile pic below.
VPOC Update: You guessed it!!! With the gap and hold yesterday we have added yet another VPOC below @ 5183.50. We still have 2 above and now 19 below.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5230 - 5235
Key Levels: 5205 - 5195.50
downside target is: 5195 - 5190 then 5185-5180
/NQ upside target is: 18.275 - 18,295
Key Level: 18,100 VPOC from Monday
downside target is : 18,075 - 18,050
/RTY upside target is: 2080- 2085
downside target is: 2060 - 2055
Economic Data: VERY LIGHT TODAY!
Wholesale Inventories @ 10:00 AM EST
Crude Inventories @ 10:30 AM EST
More Color.......
/ES - Key demand at $5140 -5155 and at $5200 with Supply at $5250
1. Sellers trapped above $5155 looking to play long after a bounce and retest targeting $5200 then $5240
2. Buyers fail to reclaim support back above $5200 after a sell off i will look to play short or if price breaks and holds below $5140 targeting $5125
SPY - Key Demand $515 then below that at $511-512 with Supply at $519
1. Sellers trapped above $512 after a sell off , break and retest targeting $515
2. I would only like to play short if price holds below $515 after a sell off or a break down below $511 targeting $509
SPX Key Demand at $5180-5190 with Supply at $5200
1. Buyers trapped below $5200 looking to play short after an early morning
sell off fails to reclaim back above targeting $5185, A breakdown below
$5180 I will also look to play short targeting $5162 then $5152
2. Sellers trapped above $5180 looking to play long targeting $5205
/NQ Key Demand at $18130 -18140 with Supply above at $18268 and $18300
1. Sellers trapped above $18120 looking to play long targeting $18144
2. I will only look to play short if price can break and hold below $18100
QQQ Key demand at $438 then at $436 with Supply above at $441
1. Sellers trapped above $438 after a sell off playing a break and retest from
$439 targeting $441 then $442
2. A breakdown / sell off and hold below $438 I would like to play short
targeting $437.50 then $436.60
As ALWAYS, have your stops in place!!!
Have a great trading day!
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