Another Gap Down. Will the Bulls Buy Again?

Here's how we're trading today's setup

Technical Edge — 

• NYSE Breadth: 38.4% Upside Volume

• Advance/Decline: 30% Advance

• VIX: ~$29.20

If you missed it, here was a recent setups list for individual stocks. 

Game Plan: S&P, Nasdaq, Dollar

The bulls faced some early selling pressure, but made a strong stand in the morning. We were looking for support in the 3740 to 3750 area, and while the ES did dip to 3734, it ultimately paid for the “strong hand” bulls, as the ES went on to clear 3800. 

Bravo if you cashed.

Now coming into Thursday, the S&P is again under pressure as the dollar tries to push higher. I’m seeing a lower correlation to bonds in the short-term and a higher correlation to the dollar, for whatever that’s worth. 

Tomorrow is the jobs report, so keep that in mind for today’s action. 

S&P 500 — ES 

Building above the last week’s high (3751) and the 10-ema, the action looks constructive. But the ES is stuck between a rock and a hard place. 

It either needs to push higher into the 21-day moving average and the 3850 area or dip into the 10-day and yesterday’s low at 3734. Eventually, one of these two zones needs to break. 

If we break lower, 3700 is in play, followed by 3640.

If we break higher, 3900 is in play, followed by 3920 and 3950. 

S&P — The Trade