Friday Prep

Going into yesterday’s open the main expectation was to be: ‘Looking at the breakdown points from yesterday as potential areas of resistance today, or just continuation lower to test that high volume area.’

In the 1 min RTH chart above you can see the move up into the late breakdown point/low volume area from the prior day. This ended up being the high for the day and the selloff was more rotational than Wednesday seeing some very wide swings. Again though, late in the session there was an aggressive breakdown and very erratic price action as the order book became extremely thin and looked more like crude. Volume was a very high 3.9m contracts, more than the prior day.

Overnight so far has ranged between 2745.75-2785.00 versus settle at 2745.50, having trended higher for much of the session. Short squeezes can be really aggressive after these types of moves to the downside. Earnings season is here again with JPM and Citi reported already today. I’d say we’re in a short term neutral zone between yesterday’s settlement and high, which I’m reading as expecting more big rotations within this area. Above/below I’d expect to see more of a directional short squeeze/long liquidation move.