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Good Monday morning!
The bears have had a very nice short-term pullback run from the all-time highs on February 19th in the ES at 6166.50 to the recent pullback lows this past Friday at 5848, which was a 5% drop! A very nice drop indeed. The bulls however had other plans in mind when they executed a huge short squeeze "bounce" Friday afternoon which started around 2:00 PM and went all the way into the close at 4:00! This left the bears in a mad scramble to cover their short positions and also left a huge spike in Friday's range which you can see in the profile pic below!
In the profile pic and key levels, you can see the bottom of the spike was 5920 and the high of the day was 5971...a 50 point rip in a short amount of time. This happens when there is highly emotional trading where one half of the trading crowd is buying hoping for higher prices, and the other 1/2 is also buying, however, the second half is only buying because they "have to" NOT because they want to!!! When you are short a stock or the S&P (ES) or NASDAQ (NQ), and the market is exploding higher, you don't have the luxury of waiting for a pullback to cover. You hit the market button to buy which also adds to the upside momentum! This is why these "spikes" occur, both to the upside and downside.
For today, as long as we are trading above Friday's high of 5971 then the short-term edge has swung back to the bulls. If buying continues over the upper targets of 6000-6005 then 6013.75 would be next which is a VPOC from Feb 27th, then 6045. I am not saying these will definitely be hit but make a note of the levels.
Now if the bears flex back and take it below 5971, then look for the POC and overnight lows, then back to the bottom of the spike, but I don't think that is the higher probability play today. I am not saying I know this for sure, but a 5% pullback in the market will bring in some bargain hunters back to the table. Futures are trading @ 5985 at the time of this writing.
VPOC Update: No new VPOC's added or taken Friday so we still have 4 above and 29 below.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 6000 - 6005
Key Levels: 5971 then 5962 POC
downside target is: 5900 - 5890
/NQ upside target is: 21,115 - 21,145
Key Level: 20,945 Prior high
downside target is : 20,640 - 20,600
/RTY upside target is: 2180 - 2190
downside target is: 2140 - 2130
Economic Data: Light Day
PMI Manufacturing Final @ 9:45 AM ET
ISM Manufacturing Index @ 10:00 AM ET
Construction Spending @ 10:00 AM ET
3-Month Bill Auction @ 11:30 AM ET
6-Month Bill Auction @ 11:30 AM ET
Alberto Musalem Speaks @ 11:35 AM ET
More Color....... By Analyst Rich Rickus
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/ES - Key Demand flipped at $5920 with Supply above at $6020-25
Bullish : Sellers trapped above $5920 looking to play a break and retest from $5925 long targeting $5940 then $5975
Bearish Buyers trapped below $5920 looking to play short from $5910 targeting $5870 then a break down into $5840s
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SPY Key demand at $592 with Supply above at $597-598
Bullish Sellers trapped above $592 looking to play a break and retest from $593 long targeting $594 then a breakout into $596
Bearish Buyers trapped below $591 after a break and retest from $590 targeting $589 then a breakdown into $587
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/NQ Key demand at $20685 with Supply above at $21050
Bullish Sellers trapped above $20810 looking to play a break and retest from $20850 long targeting $20900 then a breakout into $21000s
Bearish Buyers trapped below $20700 looking to play short targeting a breakdown into $20600 then $20500s targeting pre market low ($20515)
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QQQ Key Demand at $507 with Supply above at $513-512
Bullish Sellers trapped above $508 looking to play a break and retest from $509 targeting $511 then a breakout into $512
Bearish Buyers trapped below $507 looking to play a break and retest short from $506 targeting $505 then $503
Have a great day!!
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