something ugly brewing?📉 - Tuesday Report

Morning traders.

QuantVue team back again with another market brief.

We’ve got another action packed report for you guys so let’s just jump right into it this morning…

Impact Snapshot

  • Consumer confidence stumbles to four-month low

  • U.S. new-home sales fall 8.7% in August amid high mortgage rates

Market Evaluation

The S&P 500 slid to a three-month low Tuesday as consumer confidence in the economy waned and investors factored in a protracted period of high interest rates.

A selloff in government bonds paused after seeing numbers of 16-year high while the dollar climbed to levels last seen in November.

The threat of tight policy is undoing some of the market’s biggest gains this year in high-flying tech stocks.

The importance of yields and U.S. dollar correlation to the market is one thing we keep mentioning all the time. Futures market or equities are not going anywhere when these two are rising.

Last few days have been emotional driven and the market has not yet found balance. 

Markets Breakdown

Yesterday’s pre-market plan was seeing a clear path for the bulls if a key zone of resistance flipped into support area in order to target the next upside zone.

After our pullback support we indicated as “main level” managed to stall the downside continuation at 4341, price stared exploring higher levels.

A breakout above 4365 and a clear claim of this level as support, signaled acceptance inside this range for buyers that explored higher high range for 4 hours.

Multiple attempts from sellers to breakout bellow 4365 lead to squeeze and forced out of their position.

The biggest one happened once an emotional breakout lead to the continuation short-covering rally that targeted the exact top zone of 4384 we were watching.

The most crucial understanding of price action is being able to identify an emotional weak-hands fake out and clear acceptance into the next range. Observation of aggression and being able to identify where sellers/buyers have their stops is key. 

A bounce at the previous weekly low happened after a failed acceptance back bellow the range, triggering a short-covering rally of +0.60% that lead straight to the top zone of the range we were looking at 4384, completing the bullish scenario we’ve posted on the ON session.

The moment price bounced off that previous weekly low and back above the vWAP, sellers starting closing their positions, further adding fuel to the cause of the upside rally. 

ES

The aggression of the overnight session carried over with the market opening with a big gap to the downside that has yet to be tested. Market made a weak attempt to re-claim previous areas but failed leading to an additional 0.48% drop from the open to this time.

Our morning brief saw this exact scenario playing out with the key zone offering a 0.37% bounce. Read it here.

The most major target areas we will keep an eye on on the HTF are as follows:

  • Upside Levels: 4365/4389/4398

  • Downside Levels: 4325/4304/4291

That’s all we got today.

Happy trading out there this week!

-The QuantVue Team

P.S. — if you haven’t seen our latest LIVE trading video, catch that here: