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Market Analysis - 02.03.2020

OVERALL MARKET


Futures are mostly up overnight thanks to China's commitment to pump billions into the economy to slow the effects of the #coronavirus following the New Years holiday. Earnings season continues with $GOOG/$GOOGL reporting after the close.

 

CRUDE OIL


While $CL saw some downward momentum into the beginning of the overnight session, it has since risen back into Friday's value area. With an opening range within previous day's value, it's difficult to predict a conviction and direction of the market at this time. Keep an eye out for range extensions to the upside above 51.86 or to the downside below 51.12 in order to determine if buyers or sellers are in control. GEX levels have remained stable over the weekend, with the market pricing oil futures to stay between 50-55 per contract through the next two weeks.

Short term and long term momentum is still to the downside. Current high volume node centered around Friday's POC at 51.65. The upper limits of the node reach 51.90 while the lower area drops to 51.41. If we break below this level, downside target of the next HVN at 51 then 50.5 the most likely next level of support. If we move above resistance, look to 52.12 and then 52.40 as the next two levels of resistance.

 

S&P 500


$ES opened and is currently within Friday's value area. This denotes a lack of conviction and direction on the futures contract's fairest value. Just as in $CL, look for range extensions above 3256.25 and below 3217 to help determine if buyers or sellers are in control. $ES GEX levels show the market anticipating the contracts to remain between 3200-3270 through the end of the month. As of this writing, $ES currently at 3237.50.

Earnings season and the coronavirus are the two main catalysts for #SP500 over the next few weeks. While short term momentum has turned negative, we are still seeing positive momentum in the long term outlook. Current high volume node centered around 3237.50 with the upper end at 3241 and the lower at 3235.75. If we drop below this area, look for support at 3227.25 and then 3212.75. If we push above the node, next resistance level would be 3244.75 and then 3252.50.

 

OUTLOOK


With both $ES and $CL within Friday's value areas, look for any range extensions upward or downward, with a balanced day very likely for both barring any meaningful news. If Friday's value area is breached, look for a return to value (i.e. if we breakout to the upside, expect a reversal back to the downside by the end of the day).


As always, stay on your toes and watch for any news catalysts that could cause a change in bias. Control your emotions so they don't control you.

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