SPX SPY ES for 7/23/24
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Today was a perfect example of the importance of monitoring the subtleties of the overnight action when forming a bias. Many were expecting a gap down on the news of President Biden dropping out of the race, we instead saw a gap UP just like after the President Trump assassination attempt. We were prepared for this possibility but what happens AFTER a futures gap open is critical. If sellers (or buyers in the reverse) cannot fill the gap (to the 5pm close the prior day) then they must be presumed weak (or weaker relative to buyers). It was not for a lack of trying either it was a rather volatile Asia session last night. Once sellers failed in their attempt and a higher lower was made just under 58 they were indeed in trouble.
NQ also reclaimed and held its box overnight.
This made it extremely hard to want to be short today. The only short worth mentioning today was the look above and fail of the IB high which resolved for 35 handles
Sellers then (again) ran out of steam below the IB low and it became appropriate to look for longs once they couldn’t produce a lower low after noon EST. 80-82 was defended from above and we got the ripper we were looking for which ended up running 30+ handles.
One day on its own doesn’t change a trend, and early sellers aren’t in any trouble just yet. However, buyers have certainly accomplished the minimum required to trigger a meaningful reversal. We are coming in to a critical area for sellers to defend. Tomorrow could easily decide the next 100 handles.
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