Market Analysis - 02.07.2020
Updated: Feb 10, 2020
OVERALL MARKET
Futures markets are mostly lower after renewed fears of the #coronavirus have taken hold. OPEC are awaiting a Russian response to the production cut discussed in meetings. January jobs report is dropping this morning. Earnings season continues with the following big names reporting today include $ABBV, $HBI and $SOBKY.
CRUDE OIL
$CL is currently trading within yesterday's previous value area since the beginning of the overnight session. This demonstrates a lack of conviction from both buyers and sellers and agreed upon value. 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 again to the upside, with the range increasing to 50-55 per contract through the next week.
Overall market profile is still trending downward with the past few days in balance. Currently, the high volume node is centered around 50.68. The upper limits of the node reach 50.78 while the lower area drops to 50.52. If we break below this node, downside target of the next HVN at 50.18 then 50 the most likely next level of support. If we move above resistance, look to 50.89 and then 51 as the next two levels of resistance.
S&P 500
$ES is currently trading below yesterday's value area and has begun to hover around 3337. $ES GEX levels continue to predict the market remaining between 3300 and 3400 in the near term.
With the #coronavirus death toll and patients infected numbers both rising, short term optimism remains lower. Short term momentum has continued positive and remains in line with the long term outlook. Current high volume node centered around 3332.75 with the upper end at 3337 and the lower at 3331. If we drop below this area, look for support at 3331 and then 3323.75. If we push above the node, next resistance level would be 3342.50 and then 3350.
OUTLOOK
Both $CL and $ES currently lack conviction from both buyers and sellers. If this continues throughout the opening bell, expect a normal two sided day with responsive sellers near previous day's value area high and responsive buyers near previous value area low. Watch for any range extensions above or below these areas to indicate strong seller or buyer conviction.
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.