Monday's Tricky Action Leaves Arguments for Both Sides

A strong start in the morning gave way to a weak afternoon.

Technical Edge — 

• NYSE Breadth: 76% Upside Volume | (Nasdaq ~85% upside volume)

• Advance/Decline: 73% Advance 

• VIX: ~$20

I found yesterday’s action quite tricky, as the S&P ramped higher through the morning, then dumped in the afternoon. While we did highlight some of the bigger weekly levels yesterday — like last week’s high, downtrend resistance and the 50-week moving average — it was still a very bullish day until the afternoon. 

On days where breadth is clocking in above 80%, I’m a buyer of the intraday pullbacks. That didn’t work out very well yesterday, but that’s why trading is a numbers game. If every pullback was a buy then there wouldn’t be any guesswork in this profession. 

S&P 500 — ES

Same chart as yesterday. Notice how the ES has powered through that major downtrend mark. But also notice how it’s still struggling with the 50-week moving average. It’s back below last week’s high at the moment too.

I’m not saying the bulls have lost control. What I’m saying is, I feel like coming into Monday, many traders had ignored the bearish narrative because of Friday’s strong session. 

It’s completely possible for the ES to maintain its upward trajectory. 

If we zoom in a bit, the support levels I’m looking at include ~4015, which is the 10-ema on the 4H chart (right), as well as the afternoon low from yesterday. 

Below that opens the door down the 3990 area, where we find find the 200-sma on the H1 chart (left) and a prior consolidation zone. 

SPY