Welcome back everyone!
The highly anticipated sell-off has come following the break below the 6797 VAL (Value Area Low) support level. Prior to analyzing the market structure for tomorrow, I will first detail the key events that transpired today.
Before we discuss the S&P session, I want to point out a stock that was postedin the watchlist.
IMNM saw a 25% rally today, which resulted in a 56% gain for common shares. As is already known, I favor longer-dated call/put options on the watchlist. This strategy applies to all featured stocks. The following chart illustrates the significant strength by one of these stocks over the last month:
The S&P slid down from the 6880 HVN high which was noted last night inside the weekly newsletter. This offered a phenomenal setup for shorts as we saw a nearly 100 handle sell-off from this level. I noted that it was likely the HVN high would be met with sellers for a trip to the POC then the HVN low. All of this unfolded with a move below the HVN low and now in after hours we are witnessing an attack below the 6797 VAL. This is a key level for the week with bull thesis above and bear thesis below.
Now that we have seen a move below we want price to open below this level for a follow through on downside. The last two weeks we have seen price balance in this area with only one break above out of the value area. Less than 24 hours later we sold below the VAH and nearly hit the VAL. Very typical move when we see a failed attempt at price discovery. For bullish momentum to continue, we needed to see a rally above the 6797 VAL with not a close below. While price never close below this level, we are witnessing selling through this overnight.
We called on a high to be put in at lower 6800s. This was mostly based on a lower high which was invalidated but the balance in the last two weeks gave a clear hint that the market wasn’t ready to move higher. Especially after the Fed cut rates by 25 bps and unleashed purchase of Tbills. Moving forward we are now in bear territory. Rallies are being sold and has taken out the key VAL at 6797. For tomorrow’s session, we will lean on 6797 being a key level for both thesis.
Here’s the updated chart used for tomorrows levels:
Scenarios for tomorrow
As long as price remains below 6789, then I expect continuation down toward the VAL at 6734. Leave wiggle room for this at it’s an extreme level so the target will be 6742.
On the flip side, I would like to see a rebound above the 6797 VAH for a move back up to the POC at 6856.
These levels are pulled from the December 2025 expiration.
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Good Morning and thanks for the early knowledge !! lets rock the day