Wednesday Prep

Review

We saw some aggressive reversals yesterday, first with the initial move lower to tag the overnight low, the 15 point rally to tag Friday's nVPOC, followed by a sharp sell-off back into the current multi day range VPOC.

The high is weak from yesterday, as is the all time high. Even if we begin a sell-off from here, the carry forward information is that the odds of those levels being taken out is high, whether today or at some point down the line. 

The chart below shows yesterday's zones and the market internals. You can see that the initial move lower did not show broad market participation as the NYSE TICK stayed mainly above zero and the NYSE A/D was climbing. At the 2274.00 high there is a clear negative divergence in the TICK and the A/D had stopped climbing at around 2270.00. 

Overnight

The market tried again to push lower but failed to take out the 59.50 level. It has remained within the bottom half of yesterday's range, currently between 2259.75-65.50. European indices have rallied, Bund and Treasury yields fallen along with the EURUSD. 

The main event today is Trump's first press conference since being elected at 11:00 ET, which has potential to bring some highly volatile action into the markets.

Plan

The short term bias is neutral as the market continues to rotate around the current range high volume area. The long term bias is bullish still, though the aggressive sell-off yesterday could still have some legs to try to test the bottom of the range. The bull/bear zone is at 63.50-65.50.

If there is a break lower I would be looking for responsive buying at the 42.50-44.50 zone, which was a breakout area from Jan 3rd. If that breaks I would expect a flush through to the Dec 30th nVPOC/settlement in the 34.50-37.50 zone. On the upside, if the 69.25-70.25 zone is taken out and holds, the all time high is the next target. 

Zones