Seasonality did you say. COVID 2.0?
If we go by the seasonality chart, it did not disappoint with Feb 19 marking the top last week. In addition, this so far, would be a look above and fail of balance. Buyers held the 6108 area on Thursday, but failed to continue on Friday. This opened the flood gates and we sold down. 4 bearish Single Prints were then created.
Of the last 5 Fridays, 4 of them now have failed with a liquidation lower with this past Friday being the largest – roughly 107pts. We ended the week at the CPI lows nearly sweeping them. We also for the last few hours battled around the Year To Date (YTD) Vwap. Is this the low or is there still more pain?
With sellers having the single prints (5989.5-6002.25) from Feb 3rd in their crosshairs, we need to assume it’s in the cards. We also have the Sunday Feb 9th low which has not been tested during RTH. I would expect both of these will occur sooner than later. It is possible that a retracement can happen initially towards Friday’s VAL 6050 then continue back down. OR we continue selling with a gap down into the major pivot 6002-6012. The expected move for the week is 100pts which throws us down to 5920-30’s. The upper range would be towards Friday’s high.
For this week, will use Friday’s range as a guide. At roughly 107pts, the full extensions are just as high. A full move lower lines us with an old level of ours 5917-5922. Friday’s low lines up with the CPI event candle low, and near YTD Vwap. Friday’s high is last week’s POC including the prior Friday’s mid range.
Four Single Prints are now above us where buyers will need to reclaim.
- 6039.25-6045.5
- 6062.25-6066
- 6068.75-6081.5
- 6105.25-6113
Each of these can be points where sellers re-appear. Just above the first one is Friday’s VAL at 6050 and Feb VAL 6056, where I also believe is an important level(s) for buyers to reclaim. Acceptance higher can see a move back towards 6068-73 with the Friday halfback being 6078. If long from lower, would take most off here as 6088-6105 may be a problem as this would include Friday’s POC. 6103 was Thursday’s low, acceptance above would clean up the final single print and target Friday’s high. Above Friday’s high would see a test of Balance top.
Weakness will show if Friday’s VAL is defended by sellers and we move below Friday’s low. However, we need to be aware that a bid could come out from multiple areas below here. A sweep of CPI low 6020.75 and Feb 9 low 6011.5 are both potentials for a look below and fail. You have the major pivot 6002-6012 and single print 5989.50-6002.25. Failure on the bulls to defend either of these can see further liquidation to 5965-5980 where the Friday 50% extension is followed by the balance bottom 5952.50. Holding below the major pivot has the potential to cause trouble for bulls and give us a rotation all the way to the 5917-5922 spot.
Any look below and fail below Friday’s low, CPI low, or Feb 9 low will ultimately need 6050 to be reclaimed and supported.
I would prefer that we gap down into the major pivot and single print on Monday where I will be looking for a reversal to occur. If this happens, will ride long back to Friday’s low where I will take some off and leave runners. From there, buyers will need to reclaim Friday’s VAL and continue higher as outlined above. Friday’s sell left poor structure so it will need to be revisited. How much gets cleaned up depends on or when sellers pop back in. Monday’s usually continue Friday’s trend, but can also balance then flip. Will also note that NQ did create a tiny spike down where ES did not. New shorts at Friday’s low, though can work are somewhat shorting the hole here (at the moment). Would be better to re-engage a short from higher such as Friday’s VAL or from a failed reclaim of the single prints above, or closer to 6080’s/6100 which would be better for short to engage.
With that said for either direction expect traps to be had for all sides as they decide what to do with the outside drama. We have NVDA ER this week and may, as has in the past, determine the next move.