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Good Wednesday morning!
The bounce we've been anticipating has arrived! As we have been saying the past two days, this market was put in an oversold condition very quickly, and on top of that, those key levels in the S&P cash at 5560-5550 held like a champ. Yes there was an undercut of 5550 as the prior low was 5528, but look at where the market closed...5572! That my friends was a perfect 10% drop from all-time highs and shorts have been covering and the "buy the dip" crowd also came back into the fray.
The move higher actually started yesterday at 1:30 PM EST and more upside this morning, as futures are up across the board. Also, we just had the CPI report which came out at 8:30 AM EST and futures ripped higher on top of the already bullish short term move pre-market. If certain key levels hold, which I am going to discuss momentarily, then we could have some further upside to see.
In the key levels and targets below, the first key line is the prior day's high at 5644. Think of this as a "go/no-go" line. If buyers keep it above that level, then look for upper targets. If sellers push price back down then look for a move to VAH (Value Area High) at 5616 then a retest of the POC (Point of Control) at 5600. This is what we call "runners tagging up". Yes just like in baseball. Pulling back to the POC is an excellent way to see how committed buyers truly are. Holding 5600 will be very bullish. Now if price stays above 5600 and never touches it today, then this is even more bullish and we will be looking for further upside, not only today, but over the next few days.
Now, If sellers come in and try to push price back down below the prior high and then below VAH and then below the POC, and we stay down there for most of the day and build value lower, then this bounce will be a flash in the pan so stay alert and stay fluid! Futures are trading at 5640 at the time of this writing, very close to that first key level level we're watching.
VPOC Update: No new VPOC's yesterday so we still have 7 above and 25 below. 5769 is the closest above however I don't think that will be in play today. Most likely the next day or two!
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5690 - 5700
Key Levels: 5616 and 5600 POC and 5589 1/2 Back
downside target is: 5525 - 5515
/NQ upside target is: 19,700 - 19,750
Key Level: 19,686 Prior High *KEY LEVEL
downside target is : 19,075 - 19,025
/RTY upside target is: 2055 - 2065
downside target is: 2000 - 1990
Economic Data: *Red Star Event
*CPI @ 8:30 AM EST
*Crude Inventories @ 10:30 AM EST
More Color....... By Analyst Rich Rickus
Have a great day!!
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