Morning Outlook 1/21/2021

The daily trend is up coming off a 3812.50 core buy signal on 1/20/21. The move off the 1/19 low has been quick and powerful. After reaching another all-time high, the index is skirting the Weekly Expected Move high around 3849.

The action remains bullish – with the caveat that Gamma risk (the risk related to the retail investor option buying frenzy) is unusually high – maybe even in bubble territory. Other risks include some breadth divergences as can be seen in the unweighted S&P 500 index ETF (Symbol RSP).

With prices at all time highs and an expansion of range yesterday, buyers and seller are more likely to be balanced today. A change in tone and potential further correction would only be signaled by acceptance of prices within the recent six day balance range between 3750 and 3800. The FANGMAN stocks came to life yesterday and are adding to those gains this morning, giving a relative strength hat tip to the NASDAQ 100 index.