Morning Outlook – 4/22/2021

It is hard to believe that we are almost through another week. 

Yesterday saw buyers recapture control, at least temporarily, but not to the level that we formed a full pivot higher on the daily chart. This morning will be a flat opening just inside yesterday’s range – in other words, balance. Overnight distribution is small and wide in the context of yesterday’s trending day higher. For now, overnight traders are accepting the higher prices associated with yesterday’s close.

The halfback at 4142.50 is my key line in the sand today for bull/bear bias. Buyers need to hold this halfway point in yesterday’s range. If they can hold above the overnight high at 4167.25 (also near yesterday’s high), so much the better. As a side note, halfbacks become important when there is a wide daily range, especially on a trending day supported by strong internals, such as yesterday.

On the upside, we have the overnight high and yesterday’s high at about the same level. That’s a visual and mechanical breakout point for many traders. Monitor for continuation on any break above there.

Do not be surprised if the market stays balanced and trades inside yesterday’s range today. As mentioned yesterday, we have tagged the expected move on the downside for the S&P 500, so that likely puts a floor underneath the market until options expiration tomorrow. Use the internals to guide you in this regard. Anemic ticks and an S&P 500 A/D line between -100 and +100 will be more supportive of balance than trend.

Acceptance of prices below yesterday’s halfback would change the tone back to negative, in my view. We are still holding Gold in the Swing Strategy, but my finger is on the trigger.

Good luck today.

A.F. Thornton