Market Analysis - 02.10.2020
OVERALL MARKET
Futures markets are slightly higher after initial selling into the overnight open. The #coronavirus continues to spread and reported deaths jump over the weekend. OPEC are still awaiting Russia's response to a production cut. Earnings season is still in progress.
CRUDE OIL
$CL is currently trading below Friday's value area. This shows slight out of balance activity. Currently, this is forecasting a low/no conviction day with neither buyers nor sellers in control. However, the range extension to the downside shows the potential for downward movement if significant selling can occur. $CL GEX levels remain between 50-55 per contract through the end of this week.
Overall market profile is still trending downward with the past few days in balance. Currently, the high volume node is centered around 50.08. The upper limits of the node reach 50.22 while the lower area drops to 49.95. If we break below this node, downside target of the next HVN at 49.78 then 49.66 the most likely next level of support. If we move above resistance, look to 50.34 and then 50.52 as the next two levels of resistance.
S&P 500
$ES is currently trading within Friday's value area after recovering from a large drop to begin the overnight session. $ES GEX levels continue to predict the market remaining between 3300 and 3400 in the near term.
Short term momentum has begun to drift downward as longer term momentum remains positive. Current high volume node centered around 3327 with the upper end at 3331 and the lower at 3322.50. If we drop below this area, look for support at 3311.50 and then 3300. If we push above the node, next resistance level would be 3337 and then 3342.50.
OUTLOOK
Both $CL and $ES currently lack conviction from buyers and sellers. Both futures also have short term negative momentum. TPO count for both indicate more buying pressure following the overnight opens. This may point to return to the Friday's value area at the least. However, all signs currently point to a low risk/opportunity day. This could change in an instant if other timeframe buyers or sellers enter the market. We will be reviewing option activity to see if/when this occurs and how price reacts. Strong reaction by price action to elevated option volume is our edge in the market.
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.