Market Outlook 01/14/21
/ES tested the 3770-76 support once more on Wednesday (4 days in a row) and bounced back to make new highs on the day however failing to cross any meaningful resistance. The market stays boxed in the 3770-3820 zone for now waiting to pick a direction for the next leg.
/RTY continues to be the leader however another day of disconnect with /ES was observed on Wednesday. Next short-term resistance level is 2140-44 which should be the target if there’s another leg higher on Thursday. However, /RTY is again peeking above the weekly channel and likely to see a dip back into the channel by Friday (Note this doesn’t preclude a trip to news highs before a reversal kicks in).
A number of FOMC members are scheduled to speak today with Fed chair Powell’s speech at 12:30 EST. These may produce some news/commentary related spikes in the market. Make sure you have your stops.
The market levels for /ES continue to be similar to the past few days as /ES is balancing in the 3770-3820 price range. The break on either side is likely to get significant extension so make sure to keep appropriate stops if fading from the top/bottom zones.
/ES Market Levels
3848-3860 (Top of possible range)
3822-3828 (All time highs)
3804-3810 (Line in sand, bullish above)
3788-3791 (Minor support zone)
3768-3776 (Previous all-time-highs, Friday/Monday/Tuesday/Wednesday low)
3722-3738 (Breakdown target)
3685-3684 (Minor support zone)
3648-3662 (Major support zone, 2021 Low, Bottom of possible range)
/NQ observed some strength earlier in day but hit a wall near 13000 zone that bulls weren’t able to cross. Below the 12870-12898 zone, the supports are further apart giving room to liquidation breaks in case of news headlines.
/NQ Market Levels
13192-13214 (Top of possible range)
13141-13170 (Measured move on breakout)
13029-13055 (Initial target on breakout)
12945-12977 (Minor support zone)
12870-12898 (Likely target on pullback, Intraday Line in sand zone)
12780-12808 (Minor support zone)
12730-12752 (Balance zone. Look for pullbacks in this zone to buy)
12640-12670 (Major pullback zone)
12582-12602
12480-12501 (Major term support zone, Bottom of possible range)
SWING TRADES
With VIX slightly elevated but not broken out yet, out-of-the-money /ES (or SPX) puts with 8-10 days to expiration offer great risk/reward at current /ES levels (3813-3828) for a target towards 3722-3738