Market State Change or Short Covering Rally?
Updated
S&P futures have clearly broken out from the downtrend which started at the beginning of this year. Open interest information has been less reliable for the past week due to rollover from the March to June contract. OI change across all contract months was close to unchanged for Thursday and Friday.
If the rally continues early next week, overhead resistance may be present near 4586. If the move reverses on Monday, a retest of 4200 is likely by the end of the week. Below 4200 there is little market structure to lean on until 4100, where there was a test/rejection on Feb 24th. Above 4586 the market should be considered as having returned to a bull market state.
Watch the Sunday night trading for signs of acceptance or rejection of Friday's closing price. A Monday morning open above 4435 would suggest acceptance of higher price, and traders should look to buy weakness. A Monday open above Friday's close of 4453 would strongly suggest acceptance of higher price and an opening range trade should placed. An open below 4435 would suggest rejection of higher price, and traders should then look to sell against strength.
I think the most likely scenario for the next few months is that we range between 4100 and 4600. There are too many fundamental cross-currents for the market to be long-term directional right now.
If the rally continues early next week, overhead resistance may be present near 4586. If the move reverses on Monday, a retest of 4200 is likely by the end of the week. Below 4200 there is little market structure to lean on until 4100, where there was a test/rejection on Feb 24th. Above 4586 the market should be considered as having returned to a bull market state.
Watch the Sunday night trading for signs of acceptance or rejection of Friday's closing price. A Monday morning open above 4435 would suggest acceptance of higher price, and traders should look to buy weakness. A Monday open above Friday's close of 4453 would strongly suggest acceptance of higher price and an opening range trade should placed. An open below 4435 would suggest rejection of higher price, and traders should then look to sell against strength.
I think the most likely scenario for the next few months is that we range between 4100 and 4600. There are too many fundamental cross-currents for the market to be long-term directional right now.
Note
The base of Friday's late spike was supportive overnight. I'll be looking for a long entry this morning.Trade active
The opening range trade is working out well this morning. Using range estimation from last week's trading ranges, I estimate an upside target in the 4530-4540 range today.Order cancelled
Trailing stop loss hit.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.