Sellers dominated the auction yesterday up until the late afternoon where we saw a vicious short squeeze. The resulting candles for many charts look impressive, showing a long tail which suggests very aggressive responsive buying. What is now vital for a constructive bull case is for the market to stabilize and work to build value higher. This would involve initiative buying which is more confident than the gnarly reactionary buying we saw yesterday afternoon.
Although the buyers pulled off a heroic bout of buying, the market was successful in moving value significantly below where the markets traded last week. The overnight market has a very large range and we’re set to gap lower as of 8:30am.
I consider 1399.50 on the e-mini S&P critical for the bull case today. Losing that area could result in a quick revisit to yesterday’s lows. Above I’ve boxed a low volume zone where price saw significant rejection by the market several times yesterday. Should we see the market trade higher, seeing how the market behaves from 1408 – 1410.50 (also yesterday’s close) will be telling of the overall tenor of the tape.
