The market has recovered the overnight losses and will open back inside yesterday’s range. Overnight inventory is 100% net short, so some profit-taking at the open may boost prices a bit and may even be underway pre-market.
https://www.windotrader.com/
While the overall bias is bearish below our key 21-day and week lines, the overnight low held within the recent balance area low, and I would use Balance Rules if we revisit the lower level today. Note the high volume node around 4475 overnight as possible support before the balance area low at 4450.
With the overnight low around 4454. and the bottom end of balance at 4450, any test and failure is the absolute line in the sand to stay bullish today. Remember that 4500 is now likely to be resistant per our recent options gamma and open interest discussions. Also, note that 4500 is the high volume node on the 20-day cumulative volume profile to the right in the chart above. If the market miraculously moves north of that level, then target halfback and the volatility trigger at 4530-35 and monitor for acceptance.
Remember that the monthly candle turns green above 4492, and the weekly candle turns green above 4497. Those are key areas to mark on your screens.
https://spotgamma.com/
Volatility is higher today, with the Expected Move projected at about 45 points on either side of yesterday’s close (4504.08). The implied volatility range (4459 – 4549) is interesting since we already breached the lower level at the 4454 overnight low.
Options-driven resistance lies at 4500 as recently discussed, then 4530. Options support is at 4464, then 4404. As it is weekly expiration today, 20% of SPX and QQQ gamma expires. That could pin the market around 4500, give or take 10 points, as this substantial volume of options either expire or roll.
Significant put positions were added to the S&P 500 and QQQ yesterday, but new calls are still light. So flows will be influenced mainly around buying puts (driving prices lower) and selling puts (driving prices higher).
The fact that overnight follow-through has been negated and futures are trading positive now is an important piece of market-generated information to bring into today’s session. Short-covering could easily kick in if we don’t get a decisive break near the open. But in any rally, the top of the balance range at the 4530-35 target may prove formidable.
Cash accounts should stay tuned for any alerts, as we nearly tested the Navigator sell trigger overnight.
A.F. Thornton