The last few sessions have had overnight distributions that have exhibited 45-degree line patterns or close to it. These lows (S&P 4176 and NASDAQ 100 14,000) have proven secure, and last night’s distribution is no different. Remember that traders do what works until it doesn’t, so assume these lows to be secure until they are not. 

Price made new all-time highs in the overnight session. Carry this forward as potentially less secure as auctions don’t usually end on an overnight session. We also have an extensive Time Point of Control in the S&P 500 at 4181.25 in yesterday’s regular session. Wide TPOC’s are more likely to be tested than more narrow ones. Early trade could easily revisit this area as it is not far from current prices. 

Remember to continue to carry forward untested and unrepaired structures from prior sessions. It’s easy to forget these when faced with a market that is trading very one-sided right now. That means the top of the single prints at S&P 4160 and NASDAQ 100 13,933 (from 4/23) would still be in your narrative. Then, should the tone change abruptly, you will have references at your disposal.

Use the prominent TPOC in the S&P 500 as a reference today and assume that the price will trade through it at some point in today’s session. Use that information for potential fades back to this level or rallies up to it when trading on either side.

On the S&P 500, yesterday’s profile distribution is very tight, and the range is small. There is also a lack of material excess on the top that corresponds with a prior regular session high. Assume potential for a long breakout above that area. By the same token, assume the potential for a downside breakout should yesterday’s low at 4173.25 be taken out. 

In either scenario, context is king, and internals are more important than ever when attempting a range breakout.

Good luck today.

A.F. Thornton