Overnight Weakness Leads to Opportunity in the S&P500
Whether you are bullish or bearish, the current market environment has been creating opportunities for the S&P500. Overnight we had more trade war rhetoric which led the futures lower, with the S&P500 testing the 2700 level as a result. SPY came close to touching 273 in after-hours trading by comparison.
S&P500 (SPY) Major Support
273 is a major support zone, so it should be no surprise buyers have stepped in at the low this morning. Shorts are most likely part of the mix, covering in response to support.
Technically speaking, SPY traders responded to an early gap by lifting price action. The daily chart is more bullish than bearish, with TICK cumulative rising. We had one distribution day on Friday. Volume was below average yesterday.
Bullish Bias: Stocks Were Bought
Monday weakness led to a frenzied buying opportunity, as most stocks moved from red to green. It is this energy that leads us to “assume” the cavalry might show up again this morning.
Futures are Red but Trending Higher
We will give new entries a bit of room this morning considering way market participants reacted to weakness yesterday. Therefore, we will not immediately sell anything. Rather, we will sit on our hands and see what institutions make of the current news flow.
We’ll talk about the markets this morning in our LIVE session.
Happy Trading,
Vinny
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