Morning Color

September 19, 2024

Good Thursday morning!

Market participants took a bit of time to digest what just happened yesterday with the FOMC (Federal Open Market Committee) lowering rates by 50 basis points, and now we have our answer as they are very bullish about the rate cut and futures are up huge this Thursday morning!!! It is a true gap (meaning outside of prior days high) and overnight inventory is 100% net long. The DOW and S&P hit new all times highs yesterday and they will continue to set new records as well today!

This enormous gap is going to put a ton of pressure on those operators who are short and will also get those on the sidelines in a panic mode because they will now feel left out and be compelled to chase prices higher! All this leads to a market which could gap and hold for today and if there is a fade lower, most likely will be bought back to the upside!!!

PLEASE NOTE: These kinds of gaps do not happen very often and prices are, for the most part, well above our key levels and ranges so I had to do a few recalculations this morning to adjust levels. When we are opening up in new "rare air" meaning prices have never been here before, it is challenging to say where prices could actually go!

I have taken a larger picture of the profile and my apologies for the small picture but it was the best I could do. The important things to watch this morning will be the prior all time highs @ 5786, the overnight highs (at the time of this writing are @ 5779), and yesterday's highs @ 5755.55. ANY price action that stays around the overnight high and prior all time highs will be the most bullish scenario. IF there is a fade to balance out some of the inventory, look for either 1.) a look above and fail at the overnight high or prior all time highs, OR 2.) if price does not take out either price high, once the opening bells rings, there could be a short below the first 1 minute low!! Again this will be a bit difficult because there is a lot of shock and awe this morning and for the reasons I just listed above, the markets could stay up much higher and we could be in for some wild volatility!!!! Again with a true gap higher AND overnight inventory 100% net long, there "should be" some action to fade lower and balance out the inventory and first target is 5760 (VWAP) to 5755.75 (prior days high) but this is not guaranteed. Stay frosty!!!!

VPOC Update: No new VPOC's were added yesterday however we are now gapping higher and will most likely take out the lone VPOC above @ 5770. There is also a high probability that we put in yet another new one below today (because the gap is so large) but we will confirm at the end of the day. The POC (Point of Control) is @ 5700 so if price does not get back to that level today during regular trading hours, that will indeed confirm another new VPOC below. But again we need to wait until the end of the day to confirm this. Futures at the time of this writing are trading @ 5769!!

TARGETS AND KEY LEVELS TO WATCH:

/ES upside target is: 5786 prior all time highs

Key Levels: 5755.75 Prior days high

downside target is: 5720 - 5710

/NQ upside target is: 19,880 - 19,900 then 20021.50

Key Level: 19,900 Prior day high

downside target is : 19,750 - 19,720

/RTY upside target is: 2265 - 2275

downside target is: 2220 - 2210

Economic Data: BUSY TODAY

Jobless Claims @ 8:30 AM ET

Philadelphia Fed Manufacturing Index @8:30 AM ET