Market Commentary
Equity index futures trade sideways to lower staying within the prior day’s range.
- China has deemed crypto illegal.
- Equity market enduring outflows.
- Positioning risks are back in line.
What Happened: U.S. stock index futures auctioned sideways to lower overnight after a series of outlier moves; despite global equity funds seeing their first outflows in 2021, positioning risks, among other things, cooled.
In other news, China deemed all crypto-related transactions illegal and holders of China Evergrande Group’s dollar bonds haven’t received a coupon payment due Thursday.
Ahead is Fed-speak by Loretta Mester (8:45 AM ET), alongside data on new home sales (10:00 AM ET), and other Fed-speak by Jerome Powell and Esther George (10:00 AM ET).
What To Expect: As of 6:30 AM ET, Friday’s regular session (9:30 AM – 4:00 PM EST) in the S&P 500 will likely open inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity.
Adding, during the prior day’s regular trade, on positive but lighter intraday breadth and divergent market liquidity metrics, the best case outcome occurred, evidenced by initiative buying that ceased at $4,455.00.
This trade is significant because it resolved the $4,425.00 untested point of control (VPOC), an area of unfinished business so to speak.
In the process of resolve, the S&P 500 – as evidenced by emotional, multiple distribution profile structures – established a minimal excess rally high at $4,455.00 before the momentum from covering shorts was overpowered by responsive selling at key areas of resting liquidity, at and around $4,455.00, or so.
Further, the aforementioned trade is happening in the context of global equity fund outflows, a theme in line with a recent fraying in the buy-the-dip psychology.
The implications of this theme on price are contradictory; to elaborate, according to Reuters, “With outflows of $24.2 billion, global stock funds lost the most since March 2020 as investors moved in [favor] of cash where they [plowed] in $39.6 billion of funds, Bank of America Corporation (NYSE: BAC) said, citing EPFR data. Bond funds saw inflows of $10 billion.”
Bank of America’s Michael Hartnett commented: “Pessimism over passage of the $1 billion bipartisan infrastructure bill and $3.5 trillion build back better Reconciliation caused the second-biggest outflow ever from infrastructure funds and largest from consumer funds on a year-to-date basis.”
Nevertheless, Goldman Sachs Group Inc’s (NYSE: GS) Peter Oppenheimer, alongside HSBC Holdings Plc (NYSE: HSBC) strategists, believes dip-buying is a go as “we’re still in the relatively early stages of this economic cycle.”
We saw some large participant(s) take advantage of the recent dip; there was a “flurry of [bullish] trades with the SPDR S&P 500 ETF Trust (NYSE: SPY) … involved call spreads maturing in each of the next three months. The total cost was about $50 million.”
Moreover, for today, given expectations of lower volatility, participants may make use of the following frameworks.
In the best case, the S&P 500 trades sideways or higher; activity above the $4,437.75 micro composite point of control (MCPOC) puts in play the $4,455.00 minimal excess high. Initiative trade beyond the minimal excess high could reach as high as the $4,481.75 high volume area (HVNode) and $4,510.00 low volume area (LVNode), or higher.
In the worst case, the S&P 500 trades lower; activity below the $4,437.75 MCPOC puts in play the $4,415.75 LVNode. Initiative trade beyond the $4,415.75 LVNode could reach as low as the $4,393.75 HVNode and $4,365.25 LVNode, or lower.

Definitions
Volume Areas: A structurally sound market will build on areas of high volume (HVNodes). Should the market trend for long periods of time, it will lack sound structure, identified as low volume areas (LVNodes). LVNodes denote directional conviction and ought to offer support on any test.
If participants were to auction and find acceptance into areas of prior low volume (LVNodes), then future discovery ought to be volatile and quick as participants look to HVNodes for favorable entry or exit.
POCs: POCs are valuable as they denote areas where two-sided trade was most prevalent in a prior day session. Participants will respond to future tests of value as they offer favorable entry and exit.
MCPOCs: POCs are valuable as they denote areas where two-sided trade was most prevalent over numerous day sessions. Participants will respond to future tests of value as they offer favorable entry and exit.
Excess: A proper end to price discovery; the market travels too far while advertising prices. Responsive, other-timeframe (OTF) participants aggressively enter the market, leaving tails or gaps which denote unfair prices.
News And Analysis
Global equity funds see their first outflows in 2021.
Moody’s: Taper, shutdown and debt ceiling, oh my.
China bans crypto transactions, eyeing mining halt.
Underwater homeowners bailed out by equity rise.
Libor law will reduces structured finance disruption.
Pfizer clearance setting stage for broader booster.
Foreclosure starts rise following moratorium expiry.
No sign of Evergrande coupon payment Thursday.
Trader spent $50M on options betting on SPX rally.
China: I’m forever blowing bubbles. How bad is it?
What People Are Saying
About
After years of self-education, strategy development, and trial-and-error, Renato Leonard Capelj began trading full-time and founded Physik Invest to detail his methods, research, and performance in the markets.
Additionally, Capelj is a finance and technology reporter. Some of his biggest works include interviews with leaders such as John Chambers, founder and CEO, JC2 Ventures, Kevin O’Leary, businessman and Shark Tank host, Catherine Wood, CEO and CIO, ARK Invest, among others.
Disclaimer
At this time, Physik Invest does not manage outside capital and is not licensed. In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.