Unlike yesterday, this morning stock futures are in rally mode with the S&P500 set to open .5% higher. Despite all the wild price swings, the action remains contained in a multi-week range.
Every passing day brings us one day closer to breaking that range. I think most would agree with me, that we'd like to see that break come soon.
We've seen a series oh higher lows put in, with the attempts at an upside breakout thwarted at resistance. Last week it was a late Thursday Tweet on Tariffs that brought futures down. Yesterday it was Syria. The market is using the negative headlines as an excuse to bring prices down. We know how these named dips have worked out previously.
I do like the odds of further price recovery over the short to medium term with a confirmation coming on a break of resistance. Until we break over resistance it will remain tough to commit to upside.
On the flip side I think if S&P500 futures tries to break resistance again and fails, that the odds increase substantially for a sharp move lower with a test and even a possible break of the 2018 lows.
Longer term the outlook is not as clear. However if I had to pick where the market was headed over the next 4 to 6 weeks I would say $QQQ is going back to $170, $SPY $278-$280 and $IWM $160.
The VXX and VIX have finally given way this morning. Could it be another false breakdown? Possbily. Both have remained stubbornly high.
A VIX under 20, and a VXX selling off in the face of a market rally are something the bulls can hang their hats on if this upside price action is to stick around for more than half a session.
Yes... half a session... as in... we need to see that afternoon swoon go away. We have seen it far too often, even yesterdays session had a swift afternoon swoon.
We have a lot to keep our eyes on. I would like to see a break and hold over current short term resistance. That, coupled with a falling VIX and a $VXX down 5%+ would make for a great long set-up over the short to medium term.
However a test and fail at resistance could be the straw to break the bulls back, and trigger a move back to and possibly below the 2018 lows. The good news, in my opinion, is that we are very close to a resolution of this multi-week range.
See you in the chat room.