Good morning traders, today is all about the bigger picture not the song by lil baby (really love that song though) but the charts outside of intraday looks. Today and this week it will help by stepping back and looking at the bigger picture, or the 30,000-foot view. Backing out to a one-year daily chart time frame you can see we are forming a wedge pattern that looks to break out soon. We are not at the apex yet where a break is certain but we are headed there. The MACD has negative momentum but still in uptrend mode so far. Price strength is weakening, getting to a point where a trend change is going to be possible. The weekly chart time has the most clues right now as we look at the same wedge pattern. The MACD is still positive on momentum but barely because it is flattening out. Price strength is weak but not negative yet so we are still in the last gasp of positive momentum. This all tells me that there is very little reward left to the upside and that being overly long here is suicide to your account. It’s only a matter of time before momentum flips and we get a big drop but meanwhile could there still be a big rip up yes but what comes after may not be like any down day we have seen in a long time.
Key levels to watch for … Resistance (jack) 414(queen) 415-416and (king) 417-418area. Support (jack) 413 (queen)412-411and (King)410-409. The main thesis for the day is a BEARISH bias closing below 412.13 with a projected target/low of between 412-409. Alt thesis is BULLISH bias closing above 412.13 with a projected target/high of between 413-418. The main channel we are in is between 397-416. Yesterday, market strength and breadth opened gap down on the lows of the day and manage to push out of trending territory into range territory giving price action a big negative range bound feedback loop. I expect strength to open high to possibly fill the gap in order flow left yesterday making today irrational until that happens. We have Harmony between the technical side which is (BEARISH) and the Quant side (BEARISH bias). The futures have a bullish bias for the day with Dissonance between the technical (bearish) and the Quants (bullish). I apologize I had a very hectic morning so no scenarios today but I will try to make up by doing a very thorough weekend outlook. Be safe and don’t forget that your most important job as a trader is to protect the capital that you already have and we do this by knowing the risk that you take in each position you put on and understanding the risk that come along with the current market conditions. Wishing you a positive trading day, let go out and make it a great one.