On Tuesday, the SP500 put in whats called an "outside reversal bar". What this means is the market took out its prior high, however failed to hold and reversed to close below the lows. This comes after seeing last week the contract rollover from June into September, see the market sell off down to 191750 after the June contract reached its 76.4% fib extension and 1955 target with its 1954.75 high. The market recovered after the rollover lows of 191750 last week and ended the week with the market taking out the continuous 195475 high up to 195675. This allowed the September contract to meet its 76.4% fib. Monday saw a continuation of this squeeze overnight with the Sunday globex trading seeing a squeeze up to 195975 and Monday's cash open lower. Tuesday saw the market retest this globex high, take it out by a tick at 1960.00, and fail to hold, falling down to take out the cash open to reverse the market, falling into major support at 1941. Going forward, this reversal not only caught longs off guard, but has also left some shorts on the sidelines with Tuesday's retest of Sunday night's short squeeze. The close below 1950 has turned the level into new resistance with pressure against 1941 based off the 1917 low made last week. The reversal down to 1941 allows buyers a retest of major support to defend and prevent the 1917 lows from failing. Bulls must now get through 1950 resistance and recover the failed 1960 high to regain momentum. Failure to hold 1941 support gives way to target last week's 191750 low to squeeze longs and confirm the daily new high as a failed breakout. This would be a front run ahead of next week's NFP report with the downside chase to squeeze longs and lure in shorts below 1917. Failure to hold 1917 gives way to break the June 191375 low and put in a reversal for the month, giving room down to retest major support within 1890-1880 based off the May breakout.
The SP500's intraday pivot going into Tuesday came in at 1952.75. There was no range due to the tightness in the market from the previous day. The lack of direction and narrowness allowed there to be no range, giving way for volatility to expand.
This took place Tuesday with the SP coming out the cash open with lows of 1950 and running through 1956 resistance to take out the 195975 globex high by a tick at 1960.00. Turning 1958 into an aggressive short, the market fell back to retest the open and look for buyers to hold the lows. After an hour of fighting to hold the cash lows, the market fell below and held to reverse the intraday bullish bias, confirming the new high as a failure and giving way to a 10 handle flush down to 193975 to settle on the lows.
Volatility did not make new lows Tuesday with the SP500 on new highs. The rejection in the SP has led to volatility to reverse back to retesting the recent highs of 1289 prior to the recent low of 1034. Recovering above 1289 confirms the recent low as a short term bottom with room to test 16-18 from April. Squeeze through the April range coincides with the SP500 failing to hold it's April higher low at 1803, to reverse the 1.5 year upward trend.
For Wednesday, the intraday and 3 day pivot ranges are the same since Tuesday's cash range is outside the 3 day range. This range comes within 194546-194988.
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