Good morning traders, there are plenty of earning’s examples this morning but I want to single out PayPal. PayPal had relatively decent earnings reporting better than expected profit and revenues even raising full year profit guidance despite all of that it is still down close to 5% in premarket trading. A couple things to remember here, first remember I have been saying look for leadership from tech to take us down or at this point hold us study. Out of all stock reporting earnings today PayPal has the largest market cap this morning so it is adversely affecting the whole tech sector. PayPal should find support between 71-68 turning around on the day and turning the sector around with it. Also, we are butting heads up against a major resistance at 413/414 level on the SPY so it may take a couple of passes before we are able to break thru this area. Rejection could take us down kind of fast due to the air pocket between volume nodes. When it does break thru it will move fast because of the same reason (air pocket between volume nodes or lack of liquidity). I am definitely looking for pops up on the day to get short again. We are still in a gap in order flow from yesterday so as negative as things look before the open, we could get that irrational behavior push up despite intraday indicators being really negative.
Key levels to watch for … Resistance (jack) 412(queen) 413and (king) 414-416area. Support (jack) 411 (queen)410and (King)409-405. The main thesis for the day is a BULLISH bias closing above 412.74 with a projected target/high of between 413-416. Alt thesis is BEARISH bias closing below 412.74 with a projected target/low of between 412-407. The main channel we are in is between 397-416. Yesterday, market strength and breadth opened gap down and found a bottom kind of early but stay in a lower range that tested the bottom many times thru out the day. I expect strength to open weaker on the day and rise to test resistance before showing more weakness that will have follow thru over the next day or so. We have Dissonance between the technical side which is (BEARISH) and the Quant side (BULLISH bias). The futures have a bullish bias for the day with Dissonance between the technical (bearish) and the Quants (bullish). Scenarios for the day:
1) Expanded Range Day structure. we could get a premarket stall. Experience some dip buying early bringing us back to test resistance and giving another try at breaking resistance but mainly chopping back and forth. Vise versa 34% probability
2) Trend day down we open gap down and start with a push back toward the previous close. We find support on or before the previous close then begin the downtrend for the day. We usually find midday chop around either possible queen or king support area (key to watch today is for a failed trend day where we push up from target) 34% probability
3) Rounded reversal day type structure. We could get a continued push higher toward jack or queen resistance area and find midday chop around either queen or king resistance before going back down with the same energy or force we went up with the first part of the day or vice versa. 32% probability