Last week, the main area of interest was Friday’s poor low and if buyers could hold the spike from July 16. My main plan was to get a LBAF of Friday’s low and reclaim. That indeed happened Tuesday morning and we ripped higher, reclaiming then 6 day balance and cleaned up the unfinished business on Monday’s high. A 100+ points were available for those that kept a runner going into the 6430-60 exhaustion zone.
This upcoming week is the most packed week of the quarter, with more than 1/3 of the S&P reporting earnings, FOMC, PCE, and employment data. This is a massive amount of market generated information that will shape this auction likely for the next month.
Price is fully constructive and in price discovery at all-time highs. Fading price discovery (trying to meaningfully short in this case) is usually extremely damaging to a portfolio. I try to reiterate each week what must happen for intermediate trend to change. Sellers must take out a prior week low with traction and build value lower. Until then, any shorts are to be considered scalps and frankly most people should either be long or flat waiting to be long. Value completely gapped higher last week so meeting this requirement isn’t even close.
Will use Friday’s range (6402.24-6431) as a guide for the coming week. Friday’s high sits at what I have had as the start of an exhaustion zone. This does not mean to short, but rather take the foot off the gas and let price consolidate or provide a higher low to get long and go from there. For direct continuation higher, buyers will need to sustain above 6415-18 and the single print that sits just above at 6416-6420.75. Friday’s halfback also sits in this area.
At Friday’s low is last week’s POC. Holding below 6415-18 can see this low taken out which is again a poor low. We also have Wed night and Thursday price action here so a sweep down to perhaps 6394-96 should not be ruled out. The 3 day balance 50% extension also sits at Friday’s low.
Trading Lower:
Trading below 6415 can bring Friday’s low and further weakness which can rotate back to the 3 day balance top at 6374. This whole range from 6394-6374 is open to be filled on the profile so initiating new longs here may be tricky. I would expect the 3 day balance top at 6374 and 6369-73 should be supportive. IF sellers get the upper hand here, then that would be your first warning sign for buyers as multiple day lows have been taken out and would open us for a failed breakout of balance. I would keep an eye on 6353-57 which is just above Tues July 22’s RTH close. Down here, including 6369-73 could form a bottom and allow a new balance to kick in.
Friday’s extended ranges to the down side sits perfectly at 6386-88 (-50%) and 3 day balance top (-100%).
Trading Higher:
Trading above remains straightforward, buyer want to maintain the 6415-18 weekly level. A better scenario is to keep the single print open. Acceptance above Friday’s high will take us to 6437-40 where I would trim on any longs and hold a runner. Friday’s 50% extension is 6445 and 100% at the 6459-62 zone which is top of the proposed exhaustion zone. At this point we are relatively near the July expected move high – 6483-86.
Minor Levels:
6504-6507
6459-6462
6424-6428
6386-6388
6369-6373
6353-6357
Major Levels:
6483-6486
6437-6440
6415-6418
6394-6396
6338-6340
6325-6328