Market Analysis - 02.06.2020
OVERALL MARKET
Futures markets are mostly up after the overnight session as Beijing announces a 50% reduction in tariffs on US imports starting Valentine's day. OPEC+ meetings to continue today as we await an announcement on possible oil production reduction. Earnings season continues with the following big names reporting today:
$ATVI, $BMY, $DNKN, $FCAU, $PINS, $TWTR, $UBER, $WYNN and $YUM.
CRUDE OIL
$CL broke above yesterday's previous value area during the overnight session but has since returned, indicating strong sellers above 52.12. If yesterday's support remains, look for responsive buying around 50.52. Any range extensions above or below the previous day's value area will give a good indication of whether buyers or sellers are in control. $CL GEX levels have widened to the upside, with the range still increasing to 50-54 per contract through the next eight days.
Short term and long term momentum is still to the downside. Current high volume node centered around 51.25. The upper limits of the node reach 51.56 while the lower area drops to 51.07. If we break below this node, downside target of the next HVN at 50.85 then 50.52 the most likely next level of support. If we move above resistance, look to 51.85 and then 52.12 as the next two levels of resistance.
S&P 500
$ES again opened above yesterday's value area and has begun to meander around 3350. $ES GEX levels predict the market moving between 3300 and 3400 in the near term.
Earnings season continues and the #coronavirus continues to show little signs of slowing down, and investors continue to discount the economic consequences of this event. Short term momentum has continued positive and remains in line with the long term outlook. Current high volume node centered around 3350 with the upper end at 3354.25 and the lower at 3342.50. If we drop below this area, look for support at 3337 and then 3331 (previous value area high). If we push above the node, next resistance level would be 3355 and then 3400.
OUTLOOK
$ES is continuing to move higher on regional containment of #coronavirus and on continued positive trade news. $CL buyers and sellers will most likely continue to push the commodity contract up and down until a decision is reached by OPEC. $ES buyers are currently in control while there is a lack of conviction in the $CL market. Look for crude to react strongly to the upcoming announcement 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.