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Good morning traders, as you know there is a lot going on this week with FOMC , earnings, jobless claims and CPI all happening this week. There is a lot of risk that is not being priced in at the moment. All this has me on high alert for a sharp flash crash type of move. The weekly time frame on the futures still has lots of positive momentum however the daily is losing steam. The 4-hour chart is at a point where it’s ready to break the current up trend by getting a few closes below 4561. That would lead to a domino effect pushing the daily lean to the lower end and closer to breaking its up trend. With so much news ready to drop it’s a good ideal to stay small in size and wait for directions to shake out or at least extremes to be established. The timeframes in control today are the 4-hour and hourly on the spy and 4-hour and 30min on the futures in that order. Things are looking kind of weak this morning but in order for the weakness to continue Meta, Intel, google, Microsoft and Nvidia all have to turn around this morning. The 5 stocks I just named will be the leaders on the day and decide if actually start to go a lot lower than the target of 453 to the high 451 area on the day in the Spy.
Key levels to watch for … Resistance (jack) 455 (queen) 456 and (king) 457-458 area. Support (jack) 454 (queen)453 and (King)452-451. The main thesis for the day is a BULLISH bias closing above 454.16 with a projected target/high of between 455-458. Alt thesis is BEARISH bias closing below 454.16 with a projected target/low of between 454-451. The main channel we are in is between 453-471, that’s a lot of room to roam during a FOMC week. Yesterday, market strength and breadth opened high climbed even higher out the gate and just as fast fell to lows of the day before staying range bound the rest of the day. I expect strength to be range bound again today playing just above the positive side of the line and maybe we start to see some divergence ahead of tomorrow. We have somewhat of a Dissonance between the technical side which is (50/50) and the Quant side (bullish bias). The futures have a bearish bias for the day with somewhat of a dissonance between the technical side (50/50) and the Quant side (bearish). Scenarios for the day:
- 1) Expanded Range Day structure. We could see some spikes down at some points during the day but minor rallies to try and fight back up behind the spikes. Overall consolidation as we get ready to find a new extreme in the range during the week. Vise versa 36% probability
- 2) Rounded reversal day type structure. We could get a continued push lower toward jack or queen support area and find midday chop around either queen or king support before going back up with the same energy or force we went down with the first part of the day or vice versa. 34% probability
- 3) Trend day Down we open gap down and start with a push back toward the previous close. We find resistance 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. Then the second half of the day we start with a head fake but turning in to a rally heading into or around the close or vice versa 30% probability