From yesterday's prep: 'A lack of buying interest could see a break lower again, possibly to retest the high volume 35/36 area. The contraction in daily ranges over the past few days may continue for now, but looking for a decent move soon and a sell-off is likely to be jumped on by hedge funds in my view.'
The range and volume distribution of yesterday's overnight market was overlapping below the prior two days and had breached below the bull/bear zone I had at 61.50-64.00. Opening below there was a caution on any longs and the RTH high ended up at the top of that zone.
A random tweet regarding a rumour that Gary Cohn had resigned from his post sparked enough downward momentum to bring in more sellers, even after the rumour was discredited. The last hour was particularly bearish seeing very negative TICK and A/D readings, and a shift of the VPOC down to 2429.75 after slicing through the composite high volume area (CHVA) and weak low shown in the chart above.
Overnight the range is currently 2424.25-30.75 versus settlement at 29.50.
Yesterday's profile has many anomalies left in it which have a high chance of being revisited. However, the pressure remains on the downside for now and my main expectation for RTH today is to balance at lower prices, probably overlapping below yesterday's range. I wouldn't expect to see any advance beyond yesterday's mid point on the upside if shorts get squeezed, and on the downside I see potential for a move down to the 2400 area if the market can't break the 33-34 resistance zone. As always, context is key and a close watch of market internals and order flow in conjunction with price action and value development is needed.
Zones below for today (overnight bull/bear zone 29.50-30.50)