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Good Thursday morning,
A dark and ominous start to the trading day as DOW component CAT and Mag 7 Stock META reported and are both down sharply after reporting earnings putting big pressure to the downside! Buyers tried to keep the bounce from Friday going yesterday but we are now witnessing an epic failure. Our upside target for the bounce was 5150 and yesterdays high only went to 5124.75, so that is a sign that buyers were not as committed as some people thought. And with this large move down ahead of the open, its all about the levels shown in the profile pic below!!!
As we noted yesterday.....
"Buyers continued with their operations yesterday and our upper target was hit @ 5105. This is quite impressive and shows us that investors are willing to accept and pay higher prices after the recent pullback. The big question now is....will this continue or are traders looking for the next leg higher to sell into this strength?!?!"
Looks like we have our answer!!
Overnight inventory is almost 100% net short and we have a true gap lower outside of prior days range. Futures are already making a "B line" to our lower targets so keep them in your crosshairs. That being said, with overnight inventory net short AND a big gap lower, there may be a fade first, meaning futures go higher a bit first to balance out the overnight inventory! First target would be to the gap fill meaning yesterdays low and the overnight high @ 5082. If buyers keep going, then we could get into the overlapping value portion and the two POC's that are listed in the pic. (Some of you will get the reference in the profile pic!) If and only if these levels are hit, then look for upper targets. There is always the possibility of a short covering rally.
NOW, if selling pressure persists, and this seems like the most likely outcome today, this shock and awe will start to hurt a lot of people, especially those that are trapped at much higher prices! Eventually, they will not be able to take the pain and pressure of watching their gains disappear and their losses mounting ever higher....and will dump their losing positions adding more pressure to the downside!
VPOC Update: No new VPOC's yesterday however we are close to taking one out to the downside @ 5047.50! We still have 2 above and 17 below...... for the time being.
TARGETS AND KEY LEVELS TO WATCH:
/ES upside target is: 5130 - 5140 then 5150
Key Level: 5082 Yesterday Low & Overnight high
downside target is: 5075 - 5070 then 5050 (then 5005)
/NQ upside target is: 17,825 - 17,850
Key Level: 17,525 Yesterday low & Overnight High
downside target is : 17,500 - 17,470 then 17,350
/RTY upside target is: 2025- 2030
downside target is: 1985 - 1980
Economic Data: Light today!
GDP @ 8:30 AM EST
Jobless Claims @ 8:30 AM EST
International Trade in Goods and Services @ 8:30 AM EST
Pending Home Sales @ 10:00 AM EST
Natural Gas Inventories @ 10:30 AM EST
More Color.......
/ES - Key demand at $5040 - 5050 with Supply above at $5130 -5110
1. Sellers trapped after sell off above $5040 looking to play long targeting
$5100. A breakdown below $5030 and pullback below and hold under
$5040 I will look to play short targeting $5025 then $5005.50
2. Buyers fail to break out above $5130 after an early rally playing short
targeting $5110 then $5085
SPY - Key Demand at $499 then at $492 with Supply above at $508-507
1. Sell off fails to break below $499 looking to play a break and retest long
targeting $501 then $503. A strong sell off below $498 and pullback below
$499 I will look to play short targeting $496 then $495
2. Buyers at the open fail to break new HOD at $508 after new one made
inside Supply looking to play short targeting $506 then $504
SPX - Key Supply at $5090 -5060 with Demand below at $4950- 4965
1. I would only like to play short after a break and retest under $5060
targeting $5028 . Sellers trapped above at $5005 looking to play long
targeting $5030
2. A break down below $5000 leaves room to downside to $4970
/NQ - Key Supply at after Gap down at $17520 that was previously demand
1. Buyers trapped below $17550 looking to play short targeting $17488
2. Sellers trapped above $17400 after sell off looking to play long
QQQ - Key Demand at $417-419 then Supply above at $429-428
1. Buyers fail to break out above $428 looking to play short targeting $426
2. Sellers trapped above $420.50 looking to play long targeting $423 & $425
AMD Demand flipped to Supply at $152 with Demand below LOD at $145
(MON)
Buyers trapped to break out above $152 looking to play short targeting $149. Sell off where sellers are trapped above $147 I will look to play long targeting $151
TSLA - Key demand at $158-159 with Supply above at $166-167
1. Sellers trapped above $158 looking to play long targeting $162 then $164
As ALWAYS, have your stops in place!!!
Have a great trading day!
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