August 2, S&P500 Premarket Plan and Missal
Elements of truth
Image 1. A different take on the train. Emperor of the North, R. Aldrich (1973)
An obscure train film, but I love this still. It conveys so much more than trains falling off bridges or freight yards. Also great to remind the buyers that they aren’t the only ones in the house, but they’ve been slowly piecing this together over the last eight weeks.
NFP is out after the overnight session carved out a low near 5375. You can only hide bad data for so long. An aside: you need something to win an election cycle - a film star, a strong economy, or war. And proxy wars don’t count. That doesn’t leave much room for the incumbent party.
That 5400 is a key psych level but the mood into next week will depend on the day’s close. And that is something I cannot predict. Needless to say a strong buying tail here would be a welcome sign for the bulls.
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Crow’s Nest
As of writing at 6h00EST, the day pivot of 5480* is situated well above, however yesterday’s close is an important confirmation of the market tone. Bears will want to take out 5390 and stay below - any close near or below Thursday’s low will confirm their edge. Bulls aim to close the day above the pivot.
Image 2. Monday RTH to Tuesday ETH as of 8h40EST
*Update: I’ve put the plan on hold until NFP settled somewhat, I was expecting poor data but this is worse than I thought they would admit. A few hours in, the ONL is now 5383 after finding some initial support at 5390, the 100DMA, confirming this level of importance. Consider the NFP ‘high’ of 5435 as a secondary, or updated pivot. Beware of trains and their conductors. Bulls will still look for a return above 5480 to regain footing.
Friday Plan and Levels
Pivot 5435. The volatility model estimates a range of 90 points with possible 20 point extension.
a) Time above 5390 looks to test interest at pivot 5435. This is an area where sellers may come in, momentum above can target 5445, 5465, and 5480 to 5490, another zone of longer-term selling. Consider 5515 and 5530 at an extreme.
b) An open below pivot looks for time under 5410 into 5390, where buyers may defend. Consequently, support may become resistance: volume below targets 5370 and 5350, where longer-term buyers may come in.
c) The VIX is now above 20 and this will be a key psych level in the index. Buyers may be supported below 19.40, with further seller offensive over 21.70.
d) Strap in!
Image 3. ES daily levels
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