Welcome back, everyone.
Yesterday was a phenomenal session. Not only did our levels capture a majority of the move on the S&P, but the chat update sent at the low of the day solidified it. Going into the session, we leaned on the 6808 value area low (VAL) as support, with a low-volume node (LVN) below to be used as an invalidation area. Before the open, we got almost a 60-handle bounce from the 6808 level, and then again in the cash session, we saw almost 80 handles of upside. Our target was up at 6889, which we fell just short of meeting.
I want to point out how we tied in Volume Profile with the overall trend on both the SPY and QQQ. Recently, I have been very vocal about how weak tech is, as the QQQ closed the previous week below the 21-week EMA while the SPY closed above it. There is a clear, ongoing divergence between the two indexes. The last time we saw this happen, we actually experienced a sharp rally into the following week, and this is exactly what is happening right now. Over on X, this was actually posted on Sunday.
With the current market structure, we need to see the SPY follow through with selling below the 21-week EMA for a real correction to take place. I will leave further details on this for the weekly letter once we see how we close out this week.
Heading into today’s session, we have the building data (housing starts and permits), which could bring a strong rally to our building stocks: AGX, IBP, and BLD. There is not much to say on this until we see the data released and observe how these stocks react. We also have the FOMC Minutes, but I do not expect any unexpected volatility to be brought to the markets from this. No real changes in data have emerged that would alter Fed Chair Powell’s recent statements.
