Friday afternoon set up for a pretty bearish outlook for Monday’s open. After closing the gap from Thursday, the S&P 500 (Symbol: ES) gave back 76% of it’s gains to close right around the major price area of 1,350. With that amount of selling pressure into the close of Friday, it’s no surprise that we’d see a big gap down this morning. In fact, we gapped down over 10 points below some important price support levels.
As of noon on Monday, the S&P’s have recovered about 10 points off the low, but we’re still below the major area of 1,345. It’ll be interesting to see if bulls can continue to drive price higher into the afternoon session. If not, it could be a pretty bearish outlook for this week’s trading.
Outlook & Perspective:
Tomorrow we have over half a dozen market moving news pieces, so we’re looking more continuation of this higher volatility. Last week we had some beautiful setups with nice follow-through. However, we also saw some morning choppiness that lead to better trading in the afternoon sessions.
There seems to be a lot of indecision in the markets right now. This could lead to continuation of the trend that started in January, or a panic sell-off if the S&P can’t get back up above 1,350. This has made for better intra-day swings than Q1 of this year, but we still need to be cautious of choppiness. With lower volume and volatility from the open, it’s clear that many traders are sitting on the sidelines waiting for confirmation of market direction.
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