Nearing Some Extremes That Can Mark A Bottom
In what looked like a good start off the low from the earlier week, the market found resistance near 4080 on the Emini S&P 500 (ES) at the start of the week and sold off to end the week below 3900.
Internals look ugly, but they are nearing some extremes now that could mark a bottom. Cutoff for the micro1 signal trigger is low enough that even a decent strength day can trigger a buy on it. NYHL1M value was at -1801 on Friday. The last time we were this low was on 9/22-9/26 last year. Based on that, we are near an internal low, but price may have a little more work left on the downside.
The other thing to consider is that the kind of news events we are seeing right now has the potential to begin short squeezes off of the initial panic. That can bring about a low lasting a several weeks to a few months. I think the same will happen here as well once things settle down.
On price, getting above 3940 is the initial sign I am watching for a low being in place with confirmation above 4020. On the downside, if we break 3840, then the 3800/3780 area is likely to be tested next. Price action is bearish short term, bearish medium term and neutral/bearish long term. We are long in trading and LT accounts.
Grey zone resistance is at 3880-90 and then 3929-40. Support is at 3849-37 and then the 3800/3793 area.
For Monday, daily pivot is at 3889. Resistance R1 is at 3932 and R2 at 3984.5. Support S1 is at 3836 and S2 at 3793.5.
All the best to your trading week ahead.