Brief Comments – 7/15/2021

I am in an airport and posting from my phone, so this will be brief. As to our core S&P 500 market proxy, while there was some selling in yesterday’s regular session, the value area remained completely unchanged. Prices did not test the overnight low. Today we have an overnight session somewhat weaker which has taken out that prior Globex low but is currently trading above it and just inside of yesterday’s regular session range.  

Given the current price level, Balance Rules will be in play this morning, as will Gap Rules if we open below yesterday’s regular session range. From there, I would evaluate the morning session as follows:

• The first order of business will be to see if prices open on a true gap or not.  If so, given that overnight inventory is 100% net short (give or take a few ticks), the propensity for short-covering exists. 
• If we open within range, then there is no true gap, and we should assume that short-covering is already underway.  If so, yesterday’s regular session low will be the important key level to discern if we are trading in or out of balance and will be my bull/bear line in the sand for today.  
• On any strength, assume yesterday’s POC is the target.  This is the obvious high volume node that should serve as any upside magnet.  
• Any acceptance below yesterday’s regular session low would indicate a potential for a “look below and go” as per the balance rules. If so, target the Top of the Single Prints first and monitor for continuation. Tempo and tone will have a lot to do with whether or not this happens as will any divergence between Nasdaq 100 and S&P 500.  The market will need both sides to be selling for any real follow through to occur.

AF Thornton