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Good Monday morning,
Blast off! Futures are significantly higher this morning as trade talks between the U.S. and China progressed positively in Switzerland over the weekend. U.S. officials touted a “deal” aimed at reducing the U.S. trade deficit, along with news of a 90-day tariff reduction on shipments between the two super powers. This is encouraging for future agreements between the two nations, and traders and investors worldwide are reacting.
As I stated last Thursday, April 8th, the March 25th high of 5837 was my next target. Although I thought it might take some time to reach, we've already hit it today! The overnight high is currently 5865.75. This is known as a “pro gap” because people who were out of the market have missed this enormous move and will now need to chase it at this point. Also, whoever is short this market will be scrambling to cover once the opening bell rings. The “pro’s” are in and the “Joe’s” are not!
Furthermore, as previously stated, the sharp price drops or liquidation breaks we saw multiple times last week, removes sellers from the market, so that block or group of traders are gone. They were waiting for the next group of traders to sell, and obviously they never showed up. This is why price can move so fast back to the upside!
In the profile pic and key targets below, unless price falls below 5800, the buyers maintain firm control. However, we could see a temporary decline first to balance the overnight inventory. I say this because overnight inventory is 100% net long, and there’s a true gap outside Friday’s range, well above last week's entire range.
The first potential short trade is to watch for a move above the overnight high of 5865.75 followed by a drop back below it. The second setup is if price fails to take out the overnight high, look for a break below the first one-minute low, with the stop placed just above the one-minute high.
As always, if price moves in our anticipated direction lower, move the stop to breakeven as soon as possible, then trail the stop downward. The first target is overnight half back at 5800.
N.B. When gaps of this size occur, sometimes the market pauses to consolidate, so exercise caution this morning. That being said, the upper targets are 5900-5925, and potentially 5940-5950. If sellers push price lower, look for the lower targets at overnight half-back at 5800-5780. If that level breaks, expect a move to last week's high at 5741, followed by Friday's high at 5710. At this time bulls are firmly in control!
Futures are currently trading at 5854 as of this writing.
VPOC Update: Another new VPOC was added Friday at 5726.50, however, we are now gapping well up and over that level, and the next VPOC in play is 5905.50. We most likely will add another new VPOC below at 5678 as that is the POC (Point of Control) for today. We now have 5 above (because of the gap) and back to 18 below.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5900 - 5925 then 5940-5960
Key Levels: 5800 Overnight 1/2 Back
downside target is: 5800 - 5780 then 5741
/NQ upside target is: 21,160 - 21,200
Key Level: 20,700 Overnight 1/2 Back
downside target is : 20,450 - 20,400
/RTY upside target is: 2140 - 2150
downside target is: 2080 - 2070
Economic Data: Very Light Day
3-Month Bill Auction 11:30 AM ET
6-Month Bill Auction 11:30 AM ET
Treasury Statement 2:00 PM ET
More Color By : Rich Rickus
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/ES - Key Demand $5675 with Supply at $5740-50
Bullish : Sellers trapped above $5675 looking to play a break and retest above $5680 long targeting $5710 then $5725
Bearish Buyers trapped below $5600 looking to play short after a break and retest below $5590 targeting $5580 then a break down into $5550
- SPY Key demand at then at $554-555 with Supply above at $562-561
Bullish Sellers trapped above $562 looking to play a break and retest from $563 long targeting $565 then a breakout mid high $566s
Bearish Buyers trapped below $554 after a break and retest below $553 targeting $551’s then a breakdown into $549’s
- /NQ Key Demand at $19700 with Supply above at $19950-19975
Bullish Sellers trapped above $19975 looking to play a break and retest above $20000 long targeting $20,100 then a breakout back into low $2200’s
Bearish Buyers trapped below $19700 looking to play short from below $19650 targeting $19550 then $19475
- QQQ Key Demand at $478 with Supply at $485
Bullish Sellers trapped above $485 looking to play a break and retest from $486 targeting $488 then a breakout into low mid $489s
Bearish Buyers trapped below $478 looking to play a break and retest short from $477 targeting $475 then $474s
Have a fantastic day!
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