So I think today it’s good to layer on the volume profile from the last couple weeks. Price gets pulled to pockets of large volume, as is clear that area is 498 which our point of control from the last 2 weeks. This morning’s econ data has traders lowering the odds of rate cuts in May and June, which is what this market has been all about lately. So for today, we will see how the cash session digests this data and what they do with it.

I had this rising wedge drawn before 8:30 saying to be careful of a break of the wedge, but we got that at 8:30. The market was gapping up overnight but pre-market is now settling inside yesterday’s range. Price spike up above 500.50 yesterday, and we have a zone from there to 501.65. If price can hold 500.50 that’s where we trade. If price can not hold 500.50 we logically target 499 and 498 which puts the market in a rather extended state and is unlikely but not impossible, depends on how the RTH session traders feel about PPI.

Most likely scenario today is consolidation from the pre-market before making any larger moves. So know the zones so you can know where to trade.

1) 500.50 – 501.65 is likely a consolidation area early with 501.20 being the point of control. Look for price to bounce in here, it’s important to note how price reacts at the top and bottom levels. Watch volume and watch market internals for clues. Internals will likely open extreme negative, but see how they develop in the first hour

2) If price breaks below 500.50 target 499. Price will likely get pulled to 498 as that is our 2 week POC, but that is also a large drop. If price breaks 500.50 it’s more important to note how it reacts… is it straight down, slow grind down, does price get bought up immediately at these levels? This is the MGI you need to pay attention to. Slow grind is large sellers unloading and it’s not likely to stop. Quick drop is retail traders with weak hands, expect a bounce.

3) If by some way price breaks over 501.65, sellers lose faith and we can target 503.30, 503.50.

William Wallace