Notice: To view this week’s big picture outlook, click here.
What Happened: U.S. stock index futures rotated within prior range, ahead of the approval of $1.9 trillion in COVID-19 relief.
What Does It Mean: Potential for higher, given a clear break in the S&P 500’s technical downtrend, during Tuesday’s regular trade.
That said, participants ought to watch out for volatility, given key economic releases, as well as the passage of a stimulus bill.
In regards to recent market liquidity metrics, speculative derivatives activity, as well as the inventory positioning of market participants, caution is warranted.
SPY Market Liquidity 
QQQ Market Liquidity 
IWM Market Liquidity 
SPY Options Activity
What To Expect: Wednesday’s regular session (9:30 AM – 4:00 PM ET) will likely open within the prior day’s spike liquidation, inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity.
During Tuesday’s trade, the best case outcome occurred, evidenced by the S&P 500’s resolve of a multi-session consolidation and initiative trade above the $3,861.26 LVNode.
More On Volume Areas: A structurally sound market will build on past areas of high-volume. Should the market trend for long periods of time, it will lack sound structure (identified as a low-volume area which denotes directional conviction and ought to offer support on any test). If participants were to auction and find acceptance into areas of prior low-volume, then future discovery ought to be volatile and quick as participants look to areas of high-volume for favorable entry or exit.
For today, participants can trade from the following frameworks.
In the best case, the S&P 500 resolves higher, evidenced by initiative trade that takes out the $3,891.00 spike base. In the worst case, the S&P 500 resolves lower, evidenced by initiative trade that finds increased participation below the $3,855.00 RTH Low.
More On Spikes: Spike’s mark the beginning of a break from value. Spikes higher (lower) are validated by trade at or above (below) the spike base (i.e., the origin of the spike).
In case of upside (downside) resolve, participants may target the $3,959.25 overnight rally high ($3,839.25).
More On Overnight Rally Highs (Lows): Typically, there is a low historical probability associated with overnight rally-highs (lows) ending the upside (downside) discovery process.
Levels Of Interest: $3,891.00 spike base (Upside Go/No-Go Level).