Gap Down Open With Reversal?

There is a lot going on in the daily chart for the SPX Futures (ES U0-D) (I started to use the Futures charts because so much significant price activity is taking place while the US markets are closed and that is having an adverse effect on the accuracy of the cash charts).

All you need to look at on the chart is the cluster of key dates on 8/5 and the key price zone at about 1,130, which gave you time and price for the 1,130 high. There is now a cluster of dates in the 8/24 – 8/26 zone, so I am looking for a potential reversal this week in stocks. You can also see that there is support in the 1,055 – 1,040 range. A trade below 1,050 would trigger the potential reversal pattern (low so far this morning is 1,051.50).

I would expect any rally to only be a bounce into Labor Day, but anything can happen, so I am on alert.

The flip side to when you see a bunch of dates all clustered together is that sometimes they lead to big, fast moves in the direction of the current trend, which would mean a big selloff in stocks, so you can’t just blindly buy and expect prices to go higher out of this zone. You have to also manage your risk.



US Treasuries (ZB U0-D) have taken out three resistance levels and are now at a point where a pullback would not be a surprise. Here are the support levels I will be looking at. A pullback in Treasuries would by definition fuel a reallocation into stocks.



Gold (GC Z0-D) has had a nice rally over the past few weeks. There were key dates last week and the key resistance was 1,239.18. Critical support was 1,218.70, with today’s low so far at 1,211.7
I will update this chart today with new support levels.

Again, potential support and resistance levels get breeched all the time. That is why there is more to this than picking a level and hoping that it holds. My goal it to show you how I think and what I see and not tell you what to do.



The uptrend in the Euro (6E U0-D) is broken. This is not good for Commodities and Commodity stocks. I will be looking for a potential low later this week. This morning’s low for the Euro is 125.88



Crude Oil (CL Y0-D) has broken key support at about $73.5 and now has me looking for a total breakdown. I have been saying for weeks that a break of $70 would signal a new recession. That now seems like the most probable scenario after a potential bounce. I am interested in Oil and Energy Stocks if Crude gets into the $66 range (or worse?).



I am looking for the opening weakness to take prices to emotional extremes and then will be looking for potential reversal patterns at key levels.