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Market Commentary For 11/19/2020

What Happened: Alongside concerns over another round of shutdowns due to rising COVID-19 coronavirus infection numbers, U.S. index futures maintained lower prices overnight, suggesting acceptance of Wednesday’s spike liquidation.

What Does It Mean: As of now, after an earlier test, the S&P 500 index future is trading above a micro-composite high-volume node at $3,557, the fairest price to do business during last week’s trade. This comes after participants struggled to maintain higher prices for the three sessions prior, evidenced by the divergent delta (i.e., non-presence of committed buying) and low-excess at the edges of balance.

This week’s mechanical trade and minimal-excess extremes, therefore, suggests Wednesday’s end-of-day spike was the result of weak-handed, short-term buyers liquidating in panic. This statement is supported by the fact that the selling did not attract increased participation (i.e., price diverged from value).

Further, participants come into Thursday’s session knowing two key points: (1) higher prices were dominated by short-term, weak-handed participants and (2) Wednesday’s end-of-day spike liquidation did not attract increased participation, suggesting much of the selling was done in panic.

As a result, after breaking balance and testing the high-volume area at $3,557 overnight, the S&P 500 offers participants a clear framework for approaching today’s trade. Therefore, if participants manage to spend time and build value in or below the prior day’s selling activity, then initiative sellers remain in control and the liquidation could be the beginning of a new trend to the downside. Otherwise, odds favor a response as the market has now advertised prices below balance, at last-week’s fairest price, offering buyers favorable entry.

The latter scenario would result in a failed break and rotation back into the upper-balance area. The former would suggest range expansion to the lower end of last week’s balance, $3,506.25.

Levels Of Interest: Micro-composite HVN at $3,557, the $3,506.25 excess low, as well as the $3,585 balance-area low.

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Commentary

Market Commentary For 11/16/2020

What Happened: On stretched sentiment, U.S. index futures extended their gains on news that a vaccine developed by Moderna Inc (NASDAQ: MRNA) was 94.5% effective at preventing cases of the COVID-19 coronavirus. The response resulted in a confirmation of Friday’s upside balance-break.

What Does It Mean: As of now, the market remains initiative above the $3,580 balance-area high.

Further, the successful negation of last Monday’s end-of-day spike points the confirmation of a higher time frame breakout, and keeps initiative buyers in control. Trade back to last week’s balance-area, and below the $3,506.25 excess low, would question the success of this higher time frame breakout.

Moreover, given the large overnight range expansion and the likelihood of a gap open outside of prior-range and -value, there’s the potential for responsive selling and balance.

As a result, participants should monitor whether initiative participants can overcome the responsive selling. If successful, then participants should place trades in the direction of new activity.

Levels Of Interest: 100% projection of the balance-area at $3,650, the $3,580 balance-area high, the high-volume areas at $3,600, $3,540, and $3,500, as well as the low-volume areas at $3,520, $3,575, and $3,608.

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Commentary

‘We Have A Vaccine’: Market Commentary For 11/9/2020

Following a week-long, post-election rally, U.S. index futures extended their gains on news that a vaccine developed by Pfizer Inc (NYSE: PFE) and BioNTech SE (NASDAQ: BNTX) was more than 90% effective in preventing cases of the COVID-19 coronavirus. The response resulted in the upside break of a multi-month balance area.

As of now, on relatively poor structure, the S&P 500 index future is trading above the September and October rally high. Given the size of the advance, index products are extended and the odds of digestion, either through time or price, have increased substantially.

Furthermore, the aforementioned multi-month balance-break is a strongly bullish signal to be confirmed by acceptance above the September peak. That means, if prices spend time trading outside of the balance area, then the odds of a continuation to new highs increase substantially. If responsive participants were to auction prices back into the balance area, then odds favor rotational trade as low as the $3,200 boundary.

Levels of interest below current trade include the high-volume areas at $3,540, $3,500, $3445, and $3,400. Major upside references include the extension at $3,700 and projection at $3,800.