Morning Color

April 22, 2025

Good Tuesday morning!

Well, there it was folks, a perfect example yesterday of staying fluid with the market! As I mentioned yesterday morning, my initial narrative was to look for a long trade, if certain levels were taken out. But as we saw with early price action, those very key levels to the upside were not taken out, so there was no long trade to be had! The trade ended up being a great short trade to the downside, hitting not only the lower targets and overnight lows again (which we discussed yesterday morning), but price hit the second layer of lower targets at 5200 - 5175, and going even further beyond that key range!

Look friends.....there is something called "W.W.S.H.D." That stands for "when what should happen does", but also "when what should happen doesn't"! THIS IS VERY IMPORTANT. Yesterday was a perfect example of "when what should happen doesn't" The fact that price could not lift at all gave me the signal not to go long, but to go short, even though the data early on suggested higher! Now why was I looking for higher initially? Because there was a true gap lower, plus, overnight inventory was 100% net short. Historically, this tells us there is a good chance for a fade. Well that obviously never happened. The bears were stalking and the bears attacked furiously!

As we mentioned in Morning Color yesterday......

"Now, if sellers keep price below 5273, then the edge will remain with the bears and lower targets and overnight lows could be re-tested. If this happens once the opening bell rings, then no long trades. We must stay fluid! Also, if tempo and momentum increase further and we take out overnight lows and lower targets again, then the next key range would be 5200-5175. Futures are trading at 5256 at the time of this writing."

Today, we are getting a bounce as futures are higher across the board. Overnight inventory is net long but not 100%, and there is no true gap outside of prior day's range. In the profile pic and key levels below, price is above some very key levels right now so there could be further upside if these key levels hold!

If price can stay above 5194, then the edge should remain with the bulls. Also, keep an eye on overnight 1/2 back which is at 5214. That is another indicator who is winning the battle once the opening bell rings. Now if tempo and momentum continue to the upside and upper targets are hit, we could be going to 5315 then possibly 5355 if the shorts get squeezed hard today.

Now, if sellers push price below 5214 then 5194, there are some safety levels which could provide support for the bulls. The POC at 5184 and the overnight low at 5172, both of which could attract some buyers if the opening drive is straight down. This could happen to shake out longs. Now if the POC or overnight low hold on a retest, then look for price to move back higher. If however the selling is picking up steam, then once 5172 is lost, I will be looking for lower targets at 5135-5120. Futures are trading at 5230 at the time of this writing.

VPOC Update: You guessed it. With that gap lower and hold, we added a new VPOC above at 5325. We now have 9 above and 13 below.

TARGETS AND KEY LEVELS TO WATCH:

/ES upside target is: 5250 - 5275

Key Level: 5194 1/2 Back & VAH then 5184 POC then ON Low 5172

downside target is: 5135 - 5120

/NQ upside target is: 18,220 - 18,270

Key Level: 17,990 VAH and bottom of spike

downside target is : 17,625 - 17,600

/RTY upside target is: 1865 - 1885

downside target is: 1830 - 1825

Economic Data: Very light day

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