March 31-April 4
Cry the Dip
Image 1. R. Scott. Thelma and Louise (1991)
And like that, dip buyers were gone. Key last week was the hold of 5700 and traction above 5800 - the latter proved to be a crowded trade and Friday definitively sliced through what was to be major support.
Who knew that auto tariffs could be a newsworthy cliff dive. Trump has slapped the global industry by slapping a 25% tariff on imported vehicles and parts - likely disrupting the entire business model.
With momentum below 5500, this puts some traders on alert for a possible ‘C’ leg targeting 5200. Is the Bessent plan finally working? Interestingly, the TLT chart finally perked up, but it took that major loss of confidence on Friday to do so.
That may be the trade of the week, especially with a close above 91.30.
Image 2. TLT 4H chart
Reverend Bird’s Missal
As of writing, we look to be opening into a significant gap down. Again this speaks to a lack of confidence by the buyers and an uphill start to the week. I’ll be referencing prior contract balance low 5650 as the weekly pivot.
Buyers now need to repair poor structure to 5705 and close above 5750 to regain control. Once again they are looking to establish time over 5800.
Recall our main target last week, the 5838 halfback, was just off of the weekly high at 5836.50! It is critical to watch these structural levels, as responsive sellers took advantage of low buyer momentum to reload at this price. That was the main area I was watching last week for a sell, as detailed in the weekly note.
Image 3. ES weekly profiles
Coincidentally I mentioned the weak low at 5618 last week, with “trade below [setting] up the next leg down.” That was the exact low of the week.
Now we’re there, and the 5600 psych level will be a key early ‘tell’ of seller intent. With market memory intact, key levels to watch are NPOCs 5519, 5483, and psych levels 5450, 5400 (nearly monthly low 5394). I have 5368 and 5335 at extremes at this time.
Image 4. ES 4h chart and structural levels.
JOLT and PMI data at 10h30EST Tuesday with NFP at 8h30EST Friday are the main headline data points. Once again, I am expecting a steady uptick in inflation now that the Fed is finally telegraphing the transitory phrase once again. Gold (GC) seems to agree.
A side note, watch for a strong close on crude (CL) over 70 this week, which could see a run into 71.25, especially as the US moves naval and air assets into the Middle East for what might be another misadventure on behalf of its ‘greatest ally’. Same story repeats!
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