ES Morning Prep
Before looking at today’s zones of interest, let’s look at the bigger picture on the underlying cash market (SPX)
Monthly (log scale) - broken down after 3 month narrow balancing period. Holding below the 5 sma currently. Next major monthly support at the broken highs from Feb ‘25 (approximately 400 points lower)
Weekly - one timeframing lower for 3 weeks leaving long selling tails as every rally is sold down. 5 and 20 sma tests have seen responsive selling. 50 sma around 70 points lower which is still in a strong uptrend.
Daily - orderly decline with crossed and falling 20 and 50 sma, and sub 200 sma. RSI holding below 40 is indicative of the bull trend failing (currently 30). Support at 40 on RSI is indicative of a positive shift in momentum to bullish, and holding above 60 indicates strong bull trend.
Since the beginning of the war volatility has not surprisingly increased, but not to wild levels (Vix went from 20 to 34 and back to 20, and around 26 currently). Headlines dominate, as we saw on Monday when Trump tweeted and the market rallied 250 points in minutes following a steep downtrend which would have triggered short covering. Crude is essential to monitor simultaneously as the inverse correlation is strong currently with oil at all areas of production and delivery under attack.
Going into today’s open, the overnight session responded to hopes of a ceasefire settlement and is trading up about 50 pts from last night’s close. Yesterday’s RTH swing low area is my short term bull/bear as the market attempts a counter trend move. Breaking and holding beneath there leaves a lot of new longs offside and likely sets up a move for Monday’s low. On the upside there has been failure in the 6680 area overnight and a break would target 6700 and the big test is the spike high from Monday at 6748. Given the dominate short/intermediate trend is lower I’d look to fade key resistance zones for a reversal unless there is material positive news. However, there are good long opportunity zones on the intraday timeframe as well.
Overnight range is 6634.25-6681.75 versus yesterday’s settle at 6606.00