Market Analysis - 02.05.2020
Updated: Feb 6, 2020
OVERALL MARKET
Futures markets have moved to the upside mainly as #coronavirus fears continue to lessen. OPEC+ meetings to conclude today with an announcement on possible oil production reduction. Also, crude oil inventories will be released this morning at 10:30 AM EST. Earnings season continues with the following big names reporting today:
$COTY, $FEYE, $FOX, $GM, $GRUB, $MRK, $QCOM, $SONO, $SPOT and $TWLO.
CRUDE OIL
$CL has been moving upward since the opening of the overnight session. The contract remains in the upper regions of the previous day's value area with strong resistance to the upside so far. There was a strong reaction to the upside at 49.90 which should remain a strong support should that level be tested again today. Keep an eye out for range extensions to the upside above 51.07 or to the downside below 50.15 in order to determine if buyers or sellers are in control. $CL GEX levels remain contracted, with the range still from 50-53 per contract through the next nine days.
Short term and long term momentum is still to the downside. Current high volume node centered around 50.85. The upper limits of the node reach 50.94 while the lower area drops to 50.71. If we break below this node, downside target of the next HVN at 50.48 then 50.15 (yesterday's value area low) the most likely next level of support. If we move above resistance, look to 51.07 and then 51.29 as the next two levels of resistance.
S&P 500
$ES opened above yesterday's value area and has begun to settle around 3323.75. Strong reaction from 3295 demonstrates increased liquidity in that area and a likely support level. $ES GEX levels predict the market moving between 3300 and 3340.
Earnings season continues and the #coronavirus has shown little signs of slowing down, even as investors have become ambivalent towards the situation. Short term momentum has turned positive to align with the long term outlook. Current high volume node centered around 3325.75 with the upper end at 3328.75 and the lower at 3323. If we drop below this area, look for support at 3216 and then 3305 (previous value area high). If we push above the node, next resistance level would be 3331 and then 3337.
OUTLOOK
Expect $ES to test all time highs again barring any negative #coronavirus updates. Look for $CL to react strongly to both the OPEC news and to EIA inventories at 10:30 AM EST. $ES buyers are currently in control while there is a lack of conviction in the $CL market. Look for crude to react strongly to each event and manage your positions accordingly.
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.