Trading This Morning's Gap-Up | Can FB Maintain Momentum?

A VIX above $30 makes it tough to trade in my experience.

Technical Edge — 

• NYSE Breadth: 51% Upside Volume

• NASDAQ Breadth: 58% Downside Volume 

Wednesday was one of the choppiest days I’ve seen in awhile. The ES rallied into our 4220 to 4240 resistance zone, then plunged 70 points. From there, things got choppy and looked something like: 

From the open, Up 48. Down 70. Up 80. Down 33. Up 25. Down 56. 

When one ES contract is worth $50 a point, these moves add up in a hurry. That’s what life is like when the VIX is $30+

Personally, I found yesterday draining. I caught the initial downside move, but I let the chop get to me. Usually I can get a pretty good pulse on the market, but it was all over the place yesterday!

Bret Kenwell @BretKenwell

@Canny4 If i'm being honest, I can't tell if this thing is getting ready to rip or getting ready to roll over and puke... and that's what it's like when the $VIX is $30+ IMHO, it's just a choppy, unpredictable sea out there.

Game Plan 

Facebook’s post-earnings rip is giving the futures a nice boost today. We’ll see if it can last and have outlined the key levels below. 

The fireworks will keep on coming tonight too, with AAPL and AMZN due up after the bell. We’ve had some big downside breadth days, while the VIX is elevated. Sentiment is in the toilet too. That definitely has me on my toes for some type of washout and rally. 

Macro Charts @MacroCharts

Investor sentiment is at historic pessimism. In 35 years, only five other weeks got this extreme: • Four during the 1990 Recession trough / Inflation peak. • One at the exact bottom in March 2009.

S&P 500 (ES and SPY), QQQ, TLT

• Keeping it simple, but profitable. 

Yesterday paid us well on the fonce 4220 was lost. Even catching 25 to 40 points out of that 70-handle dip is enough for most traders to walk away happy. However, the subsequent late-day fade and post-4 p.m. pop leaves traders in a tough spot this morning. 

The ranges are wide but the levels are clear. 

On the upside…