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Good morning friends!
We hope everyone had a nice weekend and lets get ready for another trading week ahead. Quick recap: Sellers finally came into the markets as the DOW dropped about 440 points, the SPX shed 105 points, the NASDAQ dropped 650 and the NDX lost almost 700 points from recent highs. Even the RUT lost 130 points. This was not surprising to us at all here at MEC as we warned everyone two Fridays ago (December 29th) that the buyers were "getting fatigued" and to "look for more downside action"...."sell some overstretched longs and look for short set ups."
Well we got the pullbacks we were looking for and it seems sellers are at least taking some profits after a record breaking few months rally off of the October 27th lows. Nothing goes straight up or down forever however and we saw some nice bounces both Thursday and Friday mornings. Deja vu happened two days in a row.....we got the bounce from pre market oversold conditions at the open however sellers came back in both around the same time...right around 11;30 AM EST. This was telling me that traders and investors were still keen on ringing the register and cashing in on their recent windfall gains. It also makes sense on the timing of this selling as recent gains and more importantly taxes on those gains get pushed out to 2025!
Futures are mixed this morning as DOW futures are down about 115 (almost all the losses coming from the drop in BA...that must have been a crazy flight to be on! wow) and /ES and /NQ's are slightly higher with overnight inventory net short but balancing (meaning going higher). I am thinking the short term low 4702 in the /ES and 16,334.25 will be "secure" for now and the market needs to rally a bit off of these short term oversold conditions. (A secure low is a low "book-ended" by two higher lows)
A few other important price points to keep an eye out for (aside from the levels listed below) will be if buyers do step back in, we could see 4772 to 4788 in the /ES and 16,640 then 16,735 for the /NQ. Please note...I am NOT saying these can or will be hit today but maybe over the next few trading days!!!! For now we are still one time framing lower however if we do take out Fridays high then we will be looking for those extended higher targets. If we stay inside of prior days range or even take out Fridays lows then bears remain in control.
/ES upside target is: 4760-65
downside target is: 4700-05
/NQ upside target is: 16,580-590
downside target is: 16,350-360
/RTY upside target is: 1976-77
downside target is 1946-48
Economic Data Today:
*Very Light Today
Consumer Credit @ 3:00 PM EST
More Color.......
/ES - Sell off overnight into the morning. Key Supply zone from last week at
$4762-$4775 with demand below $4715- $4700 making a LOD on Friday. As long as
the price stays below $4792 I’ll play short. I also want to see Demand flip to Supply.
SPY - Key Supply from Friday at $471.50-$470. I want to see buyers either trapped
below $469 or $471 to play a break and retest targeting Demand $466-467.
- Sellers at the open with buyers getting trapped at $467. I would like to play a
break and retest with price holding below $468 playing short targeting demand at
$465 with Supply flipping to Demand with a sell off
- Strong sell off at the open with price falling below $465 playing a pull back and
holding below to play short targeting Demand making a new LOD
SPX - The only way I can play long is if price gets back above $4750 and holds as
Demand has been flipping to Supply. Playing short from Supply on break and retest
- Key Supply zones at $4730-$4720, $4710-$4700 ( demand $4680-90)
/NQ - Sell off into the overnight into the morning Key Supply at $16630-$16600 and
$16540- $16510 with Demand below that at $16440- 16400 then $16330-$16300
QQQ - The only way I can play long is if the price holds above $401 with Key Supply at
$400-$399 and above that $404-403. I ideally want to short rallies with no follow through
- Buyer at the open getting trapper at or below $401 playing short
- Strong sell off at the open below $395 playing a break and retest at $396 short
AMD - Key Supply Zones at $140 and $137 playing break and retest short . Demand
below at $133-$134 with a LOD from pre market Friday
TSLA - Key supply at $242.50 with demand at $234
Have a great trading day.
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