ES/SPY WEEKEND Mar 21-25
Here is the weekend look at the S&P going into the week of Mar 21-25. Last week after briefly trading below the Mar 8th low the S&P rallied for four straight days to close out the week up 6.23%. The rally was one for the history books as it marked 3 days of + 1% gains on Wednesday, Thursday and Friday. The move broke through the 21ema, the bottom of the neutral box and closed right on the 200 sma.
The gains came despite the first Fed rate hike in years, a brutal war in Ukraine raging, covid surging in China & inflationary pressures rising dramatically. Many may see the market reversal as ridiculous in the face of such bearish news, but markets oscillate between extremes and sharp reversals are the result of price getting too stretched in one direction. In this case price had become overextend to the downside. Shorts covered and longs piled on. The effects of these moves were exponentially magnified due to the massive increase in option trading in the post covid era. Friday was also quad option expiry which amplified volatility as trillions in premium became due.
Going into this week the S&P sits above the 21ema, is at the 200sma/55ema, and inside the neutral box. Price will either reject off the 55 and 200 moving averages or break through them. First target to the downside would be the 21ema at 4320. First target to the upside would be the top of the neutral at 4526.
7MESH rules apply. Below the neutral = bearish. Above the neutral = bullish and within the neutral = sideways. At this point my bias has gone from bearish on the S&P to neutral. Reason for this include:
• Price at the 200sma not above
• Price at the 55ema not above
• Price in the middle of the neutral box
Above the 55ema & 200sma I will become more positive. Above the neutral my bias would move from neutral to bullish.
Sideways price action at this point is also a strong possibility.
Last week I posted a ton of updates as the price action played out. If you are interest in what I was watching intraday go back and check out last weeks post or follow me on Twitter.
Weekly Events>>>
Monday... Powell speaks (9am)
Tuesday... ECB & Fed Heads speak
Wednesday... Powell speaks (5am), New homes sales & EIA crude inventories
Thursday... Jobless Claims & Durable Goods
Friday... University of Mich Sentiment
Notable Earnings>>>
Monday... NKE, TME
Tuesday... HUYA, CCL, ADBE, PAGS
Wednesday... GIS, WGO, KBH
Thursday... DRI, NIO
Bullish Notes>>>
Price above 21ema
Rate decision out of the way
Many Furus now bullish and pumping
Potential Ukraine/Russia truce
China supports NATO
Oil prices continue to fall easing inflation fears
Bearish Notes>>>
Price at bottom of neutral & below 55eam
10-year yields continue to rise
Powell makes hawkish remarks
Ukraine/Russia conflict worsens
China supports Russian and/or threatens Taiwan
Oil prices resume uptrend
21ema does not hold as support
Here is the weekend look at the S&P going into the week of Mar 21-25. Last week after briefly trading below the Mar 8th low the S&P rallied for four straight days to close out the week up 6.23%. The rally was one for the history books as it marked 3 days of + 1% gains on Wednesday, Thursday and Friday. The move broke through the 21ema, the bottom of the neutral box and closed right on the 200 sma.
The gains came despite the first Fed rate hike in years, a brutal war in Ukraine raging, covid surging in China & inflationary pressures rising dramatically. Many may see the market reversal as ridiculous in the face of such bearish news, but markets oscillate between extremes and sharp reversals are the result of price getting too stretched in one direction. In this case price had become overextend to the downside. Shorts covered and longs piled on. The effects of these moves were exponentially magnified due to the massive increase in option trading in the post covid era. Friday was also quad option expiry which amplified volatility as trillions in premium became due.
Going into this week the S&P sits above the 21ema, is at the 200sma/55ema, and inside the neutral box. Price will either reject off the 55 and 200 moving averages or break through them. First target to the downside would be the 21ema at 4320. First target to the upside would be the top of the neutral at 4526.
7MESH rules apply. Below the neutral = bearish. Above the neutral = bullish and within the neutral = sideways. At this point my bias has gone from bearish on the S&P to neutral. Reason for this include:
• Price at the 200sma not above
• Price at the 55ema not above
• Price in the middle of the neutral box
Above the 55ema & 200sma I will become more positive. Above the neutral my bias would move from neutral to bullish.
Sideways price action at this point is also a strong possibility.
Last week I posted a ton of updates as the price action played out. If you are interest in what I was watching intraday go back and check out last weeks post or follow me on Twitter.
Weekly Events>>>
Monday... Powell speaks (9am)
Tuesday... ECB & Fed Heads speak
Wednesday... Powell speaks (5am), New homes sales & EIA crude inventories
Thursday... Jobless Claims & Durable Goods
Friday... University of Mich Sentiment
Notable Earnings>>>
Monday... NKE, TME
Tuesday... HUYA, CCL, ADBE, PAGS
Wednesday... GIS, WGO, KBH
Thursday... DRI, NIO
Bullish Notes>>>
Price above 21ema
Rate decision out of the way
Many Furus now bullish and pumping
Potential Ukraine/Russia truce
China supports NATO
Oil prices continue to fall easing inflation fears
Bearish Notes>>>
Price at bottom of neutral & below 55eam
10-year yields continue to rise
Powell makes hawkish remarks
Ukraine/Russia conflict worsens
China supports Russian and/or threatens Taiwan
Oil prices resume uptrend
21ema does not hold as support
Comment:
Sat at the 200sma resistance and then broke through. Next resistance and target is the top of the neutral (red box).
Comment:
The 200 sma held and price pushed to the top of the neutral (now tan box). Above the neutral the next level is 4586 then the 886 fib. Still subject to headline risk as the move from the lows has been massive. Rejection at the top of the neutral(618) could take price back down to the 21 ema.
