On Friday the SPX closed at 3585.15 or +1.36% on strong market internals and a green sector profile led by Energy. After an overnight futures test of the area beneath the weekly straddle, traders debated for a few hours before we trended higher for the rest of the day. DJIA was strong and RUT small caps led the complex. NDX, the haven during this pandemic, got a bit less attention but seems to be coiling. The bullish close meant that shorts started moving out the back door during the move higher and might be conservative here as we hit the September-based bracket top about 3585. The SPX is technically above that but needs to get going now.
The structural repair around 3513/3518 and the fast return and close above the weekly point of contention near 3550 makes the bulls happy. If no one does anything dumb we seem primed to the upside. The environmental inputs are crazy people and the virus. Those factors are somewhat related, but the latter is being treated as a known quantity.
The early week support/resistance profile is relatively straightforward. Assuming price above 3550, bulls seem more than ready to break 3600. Maintenance of the top of the bracket means a run toward Monday’s ES high of 3645.25 as well as early week cash session resistance of 3650. That would be followed by Monday's ES eth high of 3668. Traders will watch how fast small liquidations are repaired. For instance, today's ES center of gravity, if you will, is 3557.25. that sits at the lower end of today's value area (3551.75 - 3575.25) and corresponds with Thursdays top distribution area. Traders would expect that point of control near 3557 to hold on a break lower. If that gave way, 3540 and the naked poc at 3505 are back into play. On any news-driven weakness that takes the market below 3500, next week's major support for the purposes of swing trading is 3450.
NYSE internals were quite bullish on Friday with A-D Lines doing a typical trend-day sideways drift at just under +2000 to finish at +2046. NYSE breadth finished up +5.69:1 and NASD breadth closed at +2.52:1. NYSE intraday tick distribution and cumulative measures were by far the most bullish of the week. The NYSE closing auction saw a strong buy of +1.7B going into the cash session close.
US Treasury action was subdued with the 2 and 3-year issues unchanged and the 5 and 10-year notes gaining around a bp of yield each. The 10-year yields 0.89% and the big 30-year bond leaves the week at 1.65%. DXY was weaker by a quarter percent and gold finally got a bit of traction today. There could be typos but will post anyway. Just hit me up if you see anomalies or have questions or anything
