http://youtu.be/292-GQ3xgZ8
Yesterday’s tight range managed to auction the value area from last Friday (annual high water mark) and successfully find sellers who were willing to send price tumbling back down to value. The overnight session has been quiet and as we approach 8:30am the markets are unchanged.
Early on my expectation is for sellers to reenter the market and probe lower for buyers. I’ll be looking for signs of a buyer reaction first at the high volume node from Tuesday’s upper distribution then at the value area high. Should the sellers press through the value area high, I’m expecting them to press down to 1538.
To the upside, any sustainable trade above the 1550 zone highlighted above could be considered constructive for the bull camp, especially on a closing basis. There were several traders on Twitter yesterday suggesting a possible island reversal on the SPY, trading up to these levels would firmly negate that price theory.
Should price sustain above 1550, I will measure bullish conviction by the size of their rotations and the price levels they’re able to accomplish, especially a clean break of the highs set last week.
Plan followed to the T so far, let’s see if buyers begin initiating through 1550…