Morning Color

February 14, 2024

Good morning everyone and Happy Valentines Day!

Looks like the bulls got some more Heart shaped chocolates today!! (What else is new right??!?!) The uptrend has definitely been broken and one time framing since January 31st has stopped, however, it is too early to say the new trend is now down! The way they (buyers) closed the markets yesterday with a fairly large push higher, closing over 1/2 back, tells me to be patient with initiating new, or additional shorts. Remember....one day does not make a trend! I think the pic above is still appropriate....will it turn into big storms or will the clouds part and the sun shines through again for the bulls?!?! Only time will tell but it looks like the game is still to the upside!

The gap lower held (meaning we stayed below Monday's lows,) and a few sellers emerged into the markets yesterday, which is a decent sign for the bears....finally....but I have an eerie feeling they may try to prop this thing right back up! Obviously I do not know this for sure but lets just say it wouldn't surprise me. As I noted in the previous MC report and reason for the shift in sentiment Monday going into Tuesday was ......

"Markets hit new record highs...again....HOWEVER...... something has changed!!! For the first time in what seems like forever (actually several months) the pullback WAS NOT bought back to new highs of the day!!!! I find this VERY interesting and important to watch!"

Well Monday's close was spot on and acted right, but yesterday felt like they were trying to squeeze shorts and I am not sure if they will continue this today. At the time of this writing, caution is well warranted for shorts. We have a true gap back outside of yesterdays range as the pullback did not even last 24hours AND there was another "V" shaped reversal back to the upside!!!! The buyers are absolutely relentless.

Now opening above or below a prior days range is only one data point....where we close and where value develops will give us clues into the end of the week. If the markets manage to stay below yesterdays highs, then the bears could be onto something!!! If the bulls take it back above prior day's highs and close there, then there could be more buying operations to the upside and we would be looking for the gap fill to Monday's low eventually...I don't necessarily mean today! If we fade and go back into yesterdays range then the bears have a chance. IF we were to somehow close below prior days low then bears would be in very good shape. By the way, don't get too excited if you are bearish as there is only a 4% chance of that happening!!

The profile pic below lays out the critical levels to watch as they are very important to use in your trading plans. And again, please think about what I said earlier..."the uptrend is now broken BUT that does NOT mean we are now in a new downtrend!"

Futures are higher this morning and inventory is net long with a true gap above prior days range. Most bullish scenario is a hold above prior day however there may be a fade lower to balance out the overnight inventory and first target is yesterday's high. Most bearish scenario would be back into yesterdays range heading towards that key level of 4970-4965.

As far as value and untested points of control, we now sit with 2 VPOC's above and 15 untested points of control still below.

TARGETS AND KEY LEVELS TO WATCH:

/ES upside target is: 5000 - 5010

downside target is: 4975 - 4965

/NQ upside target is: 17,800 - 17,825

downside target is : 17,680 - 17,650

/RTY upside target is: 2000 - 2004

downside target is: 1972 - 1968

Economic Data Today:

FED member Goolsbee speaks @ 9:30 AM EST

Crude Inventories @ 10:30 AM EST

More Color.......