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Good morning traders!
Well that was a huge rally yesterday and I am sure some bears are still licking their wounds! That was the kind of slow, steady "melt up" where traders were looking for pullbacks and they just never materialized! Those who read the Morning Color yesterday however were given the heads up that...
"I am thinking the short term low 4702 in the /ES and 16,334.25 will be "secure" for now and the market needs to rally a bit off of these short term oversold conditions. (A secure low is a low "book-ended" by two higher lows)"
Well not only did we hit our primary targets but we also blew through our secondary targets and I must say even the strength caught me by surprise as I thought it might take a day or two to hit them......
"A few other important price points to keep an eye out for (aside from the levels listed below) will be if buyers do step back in, we could see 4772 to 4788 in the /ES and 16,640 then 16,735 for the /NQ. Please note...I am NOT saying these can or will be hit today but maybe over the next few trading days!!!!"
Well not only did they get hit but they got hit with record speed...about 5 market hours was all it took! And again, please remember.... I am not perfect in my analysis nor do i have a crystal ball but I am NOT just guessing as to where the markets might go either.....this is based on reading the tape, order flow and technical analysis...not some hope or guess or feeling. So obviously i am NOT saying I get it right all the time, and I will be the first to admit when I am wrong, but I do not come into the markets with a game plan of "only this will happen" or "only that will happen." I stay very fluid with the markets and will change from long to short or short to long if that is what the markets are telling me. And even though my upper targets were taken out faster than I had expected, the market direction call higher was spot on. I am sure some people thought the down draft from last week would just continue Monday morning but seeing the secure low and the look below and fail in the overnight session to go back above Fridays lows were huge tells for me!
Futures are lower this morning overnight inventory 100% net short, however we are inside prior days trading range. When overnight inventory gets either "net short" or "net long" there is a decent probability of that inventory "balancing" meaning going opposite direction of the gap. In this case that means higher from the open. Now when that happens, look for prior days high or settlement for targets then see how the buyers and sellers react at those price points. If it does NOT balance, then the direction is probably with the gap. The one other very important thing to note is this gets much more probable when the gap is actually "outside of" prior days range....meaning above or below prior days range. This morning we are inside of the prior day so this makes it a bit more tricky so trade carefully today. Things are a bit cloudy this morning so watch your back!
Structure was poor yesterday meaning things went too far too fast so a pullback might be in order. And as futures are lower this morning, that is already happening. Lets see how the markets react at our lower targets then go from there.
/ES upside target is: 4820-25
downside target is: 4765-60
/NQ upside target is: 16,915-925
downside target is: 16,650-640
/RTY upside target is: 2015-17
downside target is 1980-78
Economic Data Today:
*Very Light Today
International Trade in Goods and Services @ 8:30 AM EST
More Color.......
ES - Selling off from Supply over night at $4803-$4793 with previous Supply flipped to
demand at $4770-$4760. Unless Sellers get trapped at the open or the price holds
above $4755 I want to play long. A sell off or price back below $4755 I’ll play short with
a break and retest from $4760 if bears can defend price above.
SPY - As long as Bulls can defend $471 I want to Play long unless we see weak signs
on the tape with no follow through in Supply or after making a new HOD
- Sellers at the Open pushed the price back below $471 and held a break and
retest from $470 short targeting $468.85.
- Sellers at the open getting trapped with price holding above $471 playing long
targeting $$472.30 first then supply at $473
- Buyers at the open getting trapped below $475 , playing short targeting demand
SPX - Key Supply area at $4785-$4795 with HOD . Hard to play short above $4744
with bulls flipping Supply to Demand Yesterday. If buyers are strong at the open with no
follow through from Key Supply , I may look to play short if there is no follow through up.
- Demand below at $4720-$4730 and $4705-$4695
/NQ - Selling of from yesterday Supply at $16790-16810 , now consolidating inside
demand at $16700-$16720 with demand below that at $16655-$16675
QQQ - Can’t play short if we break $406 and hold above $405 . If there are sellers at
the open I want to see the price hold below $401 and break $400 before playing short.
- Supply flipped to Demand at $401 -$399.50
- Key Supply from yesterday at $404-$405
AMD - Gap Down Over night with Supply flipping to demand yesterday at $148 with
Supply above at $148 with previous demand below at $143-144
TSLA - Key Supply at $240-$242 then above that at $251-50- $249.50 . Sell off over
night from $241 Supply with demand below at $234-235
META - Gap down from Supply overnight at $258-260 with demand at $251-$253
NVDA - Yesterday, Supply flipped to Demand at $515 (Supply above $525-$527)
Have a great day.
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