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Pre market indications
| Opening In/Out Balance | out of balance |
|---|---|
| Overnight Inventory | 100% net short |
| Current Price/Overnight Range | lower third |
| Shock and Awe | yes |
| Potential for Early Trade | yes |
| Short Term Bias | breaking uptrend line / testing rising 20sma daily |
Key Levels for Today
| 4230.75 | Settlement / POC |
|---|---|
| 4220.75 | RTH Low |
| 4198.50 | Overnight Halfback |
| 4178.50 | Top of Gap |
| 4168.75 | /ES 20 SMA Daily |
| 4138.75 | Bottom of Gap |
Ongoing Narrative / Commentary
Large true gap lower as markets look ahead to Powell’s speech in Jackson Hole later this week, afraid he’ll put the hawk cap back on after huge inflation increases in Europe and UK last week. Gap rules are in play, especially #2 and #4.
The gap down is so large this morning that it is putting the large gap that starts at 4178.50 into play. As the uptrend from the 7.14 low is now broken, potential is there for weaker prices that may fill this large gap. Friday’s action added another VPOC above us for a total of two. This is also a good barometer of tone shift when you start to stack them above us. Check the list down below for all current VPOCs.
The chart of the day today is a daily /ES with some key areas marked off. Early trade today will have me most interested in the 20sma (green line) and whether or not that brings any support into the market.
VPOC’s
- 08.16 4308.25
- 08.18 4278.00
- 08.09 4121.50
- 08.02 4094.25
- 07.28 4073.50
- 07.27 3975.00
- 07.26 3924.25
- 07.13 3808.00
- 07.14 3794.25
- 06.17 3675.50
Scenarios
- As with any large true gap lower on 100% net short o/n inventory, the first potential move is the fade. Either buy the high of the first one minute bar or buy the cross back up through the open should the opening drive be lower. Monitor for continuation and target O/N halfback first, then on to the full gap fill. As always, judge the success or failure of the fade by how far it goes. Keep gap rules #2 and #4 firmly in mind.
- Any gap and go scenario should be considering the 20sma daily and the top of the gap as support. Acceptance below both of these levels increases the odds of further weakness. Failing to hold these levels or rejecting away from them would be short term bullish. Sustained weakness would be accompanied by very low tick readings that don’t get positive within the first 30 minutes (or later) at all and corresponding weak breadth, A/D, and majority of 11 S&p sectors all below their opens.
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