What Happened: After a day emotional selling, dominated by short-term market participants, U.S. index futures auctioned higher overnight alongside news of COVID-19 relief measures.
What Does It Mean: During Monday’s trade, the S&P 500 initiated up to the $3,690.75 high-volume node, a valuable price, before sellers responded and extended range.
Later, as the auction traversed prior poor structures (i.e., low-volume areas), selling intensified — via a spike lower — and the session ended at extremes.
The overnight auction, however, negated the late-day selling, bringing the S&P 500 back to its most valuable price over the past two weeks of trade.
What To Expect: In light of the overnight gap higher, the following frameworks apply for today’s trade.
In the best case, buyers maintain conviction and initiate through the $3,667.75 high-volume node before continuing to at least the next high-volume node at $3,690.75, and then the prior all-time rally high.
In the worst case, if the S&P 500 remains below $3,667.75, participants would look to whether the auction — again — resists Friday’s range. Accepting Friday’s range puts in play the minimal excess lows near $3,625.00. Auctioning below $3,625.00 would put in question the higher-time frame breakout.
Levels Of Interest: $3,667.75 high-volume node is the go/no-go level today.
Bonus: Please see the below chart for context on the higher-time frame S&P 500 breakout.