Bulls Buy the Dip. Now What?

There's a big zone to clear in the S&P 500.

Technical Edge — 

• NYSE Breadth: 63% Upside Volume (pretty good for a down day)

• NASDAQ Breadth: 55% Upside Volume

• VIX: ~$21.50

The stock market has traded much better lately and even did so on Friday. We faced a another potential geopolitical outbreak last week with China, but that storm seems to have passed — for now. 

The markets dipped on the jobs report in anticipation that the Fed now has the green light for a more aggressive, hawkish policy. I still believe the market is not pricing in enough hikes for the 2H of the year — just 100 basis points between now and year-end 2022 — but we will see how this manifests itself in the days and weeks ahead. 

Let’s start with a big-picture view and see if the bulls can maintain control. (A follow-up post will come later this morning). 

Game Plan: S&P 500, SPY, QQQ

S&P 500 — ES

The ES still has two very clear levels: The 4080s and 4170. 

Above is a weekly chart, taking a “bigger picture” look at the ES as we start a new week. Still, the two levels outlined above — 4070 resistance and 4080 support — remain in play. 

If we clear 4170 and do not reverse back down, 4200 to 4225 is in play. That zone will be key. 

On the downside, the 4100 area is short-term support. Below that could open the door for an eventual test of more stout support at 4080. However, I would love a test of the 10-day moving average, which has not been tested in 7 sessions (not including Globex). 

S&P 500 — SPY