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Good morning everyone and Happy Friday!
Could it be?!? Storm clouds brewing?!?! A top in the markets forming?! The answer is.....maybe!
I say that because what I saw yesterday had signs that sellers were starting to show up, however, that seemed to be short lived once all was said and done and the the closing bell rang.
SPX closed well off of intraday lows but the tech heavy NASDAQ remained near the lows of the day at the bell. This is where things could get tricky. When markets diverge it can make intraday trade very volatile as money rotates from one group to the next. It's kind of the like the circus performer with all the spinning plates. As they continually tries to prop everything up, eventually things get out of control and it all comes crashing down. Challenge is we don't know exactly when that will happen!
Case in point....It seems like those potential "trapped" longs from Wednesday are feeling a bit more relaxed today. Even though markets were NOT able to break to new highs yesterday and bail them out (as they have become so accustomed to lately,) the /ES futures are holding up surprisingly well this morning!! /NQ's are a bit weaker.
This comes on the back of a decent liquidation break yesterday after some worrisome news came out about North Korea. According to the NY Times, "US officials are concerned that North Korea could take "lethal" military action against South Korea in the coming months!!" Not good! I mean if the market blows off and ignores potentially THREE wars happening simultaneously around the globe, then something is definitely wrong and manipulation has reached epic levels!! And oh yeah...lets not forget about China and Taiwan as that remains a major potential threat!!! GULP!
As I mentioned yesterday morning....."There was a bit of "topping" yesterday as the most amount of time and volume sit well above 4910 in the /ES so there may be some longs "trapped"! This means that as participants bought yesterday and thought the markets only go up and go up forever, no new buyers emerged and the liquidation break brought prices lower. This does not mean a definite top but be on the lookout for further weakness which could cause some "late to the party Charlies" to become very nervous, very fast!
Well they were just fine most of the morning yesterday and even into early afternoon but it was at that point the markets hit new lows for the day around 1:30 PM EST, however as fate would have it, buyers stepped right back in to support and prop the market right back up.
Again, those people that bought near the highs on Wednesday, and because yesterday did not make them "whole" and get themselves back into profitable trade locations, there must have been some angst and this is why I feel the trap is certainly set for potential pain!!! Doesn't guarantee that it is going to happen but the signs are there!
Now all that said, as mentioned, futures are holding well above 4910, which was a key level from yesterday and we are in striking distance of the 4927 area, which was our upside target which was hit yesterday! Point is this...if we do actually break lower and HOLD the drop, then those at the highs will be toast! However, if they break to new highs and hit our upside targets, then obviously Fantasy Land is alive and well. Lets see what happens today and more importantly where value develops and where we close the session!
The profile pic below really sums it all up. I have marked off some very important levels and it will be very obvious where and when things could change! Otherwise current trend remains intact.
Futures are mixed to lower this morning (only RUT futures are higher) with overnight inventory 100% net short however we are inside of yesterdays range. This means status quo.
And by the way, yes, there WAS another NEW VPOC added yesterday, BUT it was ACTUALLY ABOVE US, NOT BELOW!!!! OMG! Alert the media!!! lol
That is the first untested point of control above us in months!! This is also a bit of a sign of topping price action! It's only one data point at this time but it has to start somewhere. (hmm... are you starting to see how things play out and give us signs of who is in control?! the bulls or the bears and we aren't just guessing?!?!)
That being said, we now have ONE VPOC above us yet still sit with 16 untested points of control below us.
/ES upside target is: 4940-45
downside target is: 4895-90
/NQ upside target is: 17,740-750
downside target is: 17,545-525
/RTY upside target is: 2008-12
downside target is: 1968-65
Economic Data Today:
Personal Income and Outlays @ 8:30 AM EST
Pending Home Sales @ 10:00 AM EST
Baker Hughes Rig Count @ 1:00 PM EST
More Color.......
/ES - Key Demand at $4875 - $4890 with Supply at $4920-4935
- Sellers trapped at the open the playing a bounce at $4890 long targeting $4910
- Buyers trapped at the open after it takes out HOD from Wednesday with price
failing to make new HOD after a pullback holding below $4935 playing short
SPY - Support from yesterday at $ 485 Demand at $483 -82 with Supply at $488-489
Room for downside isn't until price can fall below $482 and hold flipping to Supply
- Sellers trapped at the open playing a break and retest long from $485
- Buyers trapped below $489 to play short targeting $487 then $485
- Sell off into the open with price holding above $482 after a pull back to play long
SPX - Consolidating inside Key Supply at $4890 $4904 with a Gap Up at $4865 - 4875
- Buyers at the open trapped below $4900 to play short
- Sellers trapped at the open into the GAP to play long
- Buyers at the open made new HOD holding above $4900 to play long after a
pullback where Supply would flip to Demand after consolidating.
/NQ - Key Demand at $17410 -17440 with Supply at $17800- 17760
- More Downside below $ 17400 where old demand isn't until $17200
QQQ - Key Demand at $420 looking for sellers to become trapped at the open
- Break and retest from $420 playing long targeting $423
Also watching …
AMD Key Demand at $170-172 with Supply at $180 and $184
- Sell off into Demand playing a break and retest long above $170
TSLA Looking to Short rallies $195 and at $205 inside Supply at $210-205
AAPL Key Demand at $190-192 with Supply above at $196-198
META Key Supply at $194-196 with Demand at $390 - 388
Have a wonderful day!
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