No melt up, looks like MFI is cycling down
As I said last week, 3 or 4 day short covering. Quite a few stocks went green this morning and rolled over. Nobody's looking at PTON and thinking, "geez I need to get into that during a war", just algos squeezing shorts.
Oil hitting transports hard, consumer cyclical is next because oil prices impact everyone's...
Yesterday I mentioned two possible paths, and obviously market took the one with more whipsaw, which is pretty common now. So Sunday night drop is (a) of (2), rally till last night is (b) of (2), and the drop today is (c) of (2). Since there is no clear 5 wave down structure, or clear bottoming confirmation, and we did not reach 100% fib extension in this (c)...
We are seeing a Hidden Bullish Divergence here, which generally means trend continuation (in this case up). This rally is going to continue, which is quite fascinating considering how much FUD is out there. This market is VERY strong.
The bearish inside day in the S&P 500 sets a bearish tone going into the president's state of Union address Tuesday evening and the Fed announcements on Wednesday. The price action in this market is bearish and it's located within what I refer to as a neutral zone. This market could easily tip up or down with the current tenseness in the market.
The inside day on Monday implies another inside day on Tuesday. The market needs new information at this point to create a strong directional play up or down. The Ukrainian situation can provide that stimulus. Be cautious at the current levels of a kick in volatility.
All futures gaps fill, and I guess even a war won't keep the algos from following their rules.
Strange thing is it looks like a melt up now. No position. Might take a break this week.
AT this point I expect both ES and YM to fill the gap. RTY and NQ already have.
The downtrend is still very much intact. Preliminary numbers from Friday show an -8.8k drop in open interest across all months in the ES.
A sharp rally after a downtrend, coinciding with a drop in open interest, indicates a short covering rally. Buyer beware!
There was some strong buying at the recent lows that is reflected in the RSI divergence. There is a possibility of move up to 4530 level if this strength continues. However, the SP500 is also at the top it's steep downward channel and may just move south from here to the bottom of the channel. The market fundamentals are worse than when we saw the January lows so...
Globex inventory is short and right at our Key Support of 4327.25-4321.50. Lets break down some paths for us today. To the upside holding above our Key Level which is also currently PM support can leave us with a test of PM resistance of 4349.50-4345.25 which we need to break and stay over to see continuation to 4362.75-4359.50 and next Key Resistance at...
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CME_MINI:ES1!
Possible Scenario: SHORT
Evidence: Price Action, bearish divergence, bearish fundamentals, VIX bullish pattern, TLT rejection at resistance.
TP1: 421$
TP2$: 410$
TP3: 396$
Time Period: Next two weeks before 18th March
*This is my idea and could be wrong 100%
