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Good morning everyone!
Another beautiful day in Paradise!!! Yesterday we had a perfect balance day in the markets as value was overlapping, meaning price is still being accepted at these lofty levels. Also the highs and lows were almost identical. (Please see profile pic below)
When the markets exhibit this kind of price action, where one day is contained within the prior day, then the market is just resting before it breaks one way or the other!! And based on the immediately preceding trend, the path of least resistance is up! (we will see the same thing in the future when the markets are actually in a downtrend but that time is not now, but the same rules will apply....mark my words!)
And by the way, if that were to happen again today, or even a fourth day in a row on Thursday, then think of it as the "Russian Nesting Doll" phenomenon, where one sits inside the other, which in turn sits inside the next, etc! This is a powerful force in the markets waiting to happen!! Think of it as a coil or spring winding up and up!
Well that is not happening today as the break higher is this morning!!!!! There was a late day surge in the /ES and /NQ and we basically closed at the highs of the session, and now this morning we have another huge gap outside of prior days range with overnight inventory 100% net long. This entire market now reminds me of Gamestop (GME). If you are not familiar, please read the story about it, and oh by the way, there was a great movie that came out recently about the entire spectacle called "Dumb Money". I HIGHLY recommend seeing it if you have any interest at all in the markets, and I know you do, because you are reading Morning Color! lol (Also "The Big Short" is another great movie about the real estate fiasco back in 2007-2008 before the collapse. Again a must see!!!)
Futures are gapping higher this morning with overnight inventory 100% net long . We are opening up outside of prior days range and there is a decent probability we fade somewhat (meaning go lower) to balance out the inventory. Target will be yesterdays high. If we do not fade lower, or it is only a small pullback, then that is still a very bullish sign!
Believe it or not, there was NOT another new VPOC added yesterday so we still sit with 15 untested points of control below us. This and value areas overlapping (see profile pic below) confirms the trend continues higher.
/ES upside target is: 4910-15
downside target is: 4880-75
/NQ upside target is: 17,590-600
downside target is: 17,430-420
*/RTY upside target is: 2008-10
downside target is: 1973-71
Economic Data Today:
PMI Composite Flash @ 9:45 AM EST
Crude Inventories @ 10:30 AM EST
More Color.......
/ES - Key Demand previously Supply at $4900-4910. Unless the price gets back below
$4875 I will view this as a sign of bullishness with selling getting bought up. If it gets
below $4875 must act as resistance to play short. Demand below at $4810-4820
SPY - Key Demand zones $482-482 and $485. I would like for sell offs to be bought
up playing long off break and retest. If price can get back below $481 and can hold
below $482 I will view this as a sign that bears are present with sellers hitting the Bid
- Break and retest Demand to play long ( where price breaks out from the key
area , pulls back and holds, retesting that area before a larger breakout).
- Price falls below $485 with it acting as resistance to play short ( it must be tested
more than once to show that bears are defending that level. Targeting $483 80
SPX - Key Demand Zones at $4840-4850 then $4800 where Supply flipped Demand.
Unless price falls below $4840 I will view this as a Bullish Sign to play long on pullbacks
- Key Supply at $4870-4860 HOD.
/NQ - Supply flipped to demand at $17560 -17590 then at $17400-17430. Downside
isn't until these areas can flip back to supply. I want to long pullback above these levels
- Break and retest short once / if those area can be defended by Bears with the
next line of demand not until $17200-50 and then $17100-50
QQQ - Supply flipped to Demand at $424 with key demand below that $420-421
- Need to see bears push price and hold below $420 for real downside
- Sellers trapped at the open playing break and retest long for key demand
Also watching …
TSLA Key Supply at $220-218 with Demand at $208-206 (Reports earnings tonight after the close)
AMD Gap up over night : I would like to play long if price can pullback and hold above
$170 ( yesterday high) to target $174 first then $176 followed by a new HOD
NFLX Gapping up to 2 year highs after earnings.
Have a wonderful day!
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