Morning Outlook – 4/30/2021 – 2nd Update

Taking my own advice, I picked up five micros at 4166 (ok – I was too chicken to go for it and use the minis). I sold them for 10 points right below the downtrend line at 4177. So I achieved a total scalp of 50 micro points at a $250 profit. Hey, it buys dinner out with the wife, right?

The sell-off into the range low (so far) this afternoon involved above-average volume, +1,000 downticks (likely exhaustion), and a spike in the Put/Call Ratio right before the price turned. It looks to be the LOD (Low of the Day), as only 96 contracts (a very low number) traded at the turn. 

We will see what happens as traders retest the low here and into the close. But the spiking of the Put/Call Ratio leads me to believe that traders are shorting the heck out of the “Look Above and Fail” implications and expecting the market to cave today. Quite a bit of that shorting seems to be taking place right around the 4166 range low itself. 

If the market does not deliver, these shorting traders could end up trapped here with poor location, forced to cover at the end of the day, Sunday night, or Monday. Also, if the market holds the low, the market remains in balance with slightly bullish implications for successfully defending its lower boundary. 

Going into the first few trading days of May, we may get another brief pop higher as payroll contributions roll into the market and the shorts panic buy, but it is hard to imagine that there is enough gas left in the tank to take us much higher. We are way past empty and running on reserves.