The S&P 500 is quickly approaching the February 21/24 gap that kicked off the coronavirus rout, with the void running from 3257 up to 3337. At this time the risk/reward for fresh trades isn’t particularly favorable. Fresh longs are at risk of a pullback given how extended price has become, but at the same time momentum is still a bit too strong to be fading. A pullback would help alleviate some of the short-term extreme and potentially offer a good risk/reward opportunity, while a run and reversal off resistance may give traders the upper hand from the short side.
The Nasdaq 100 is at record highs and approaching a very big inflection point as well in the form of the upper parallel of a channel dating back a decade. It has marked the high of up-moves on a few occasions since early 2018, so it could again here soon. Or, if the speculative fervor of the market continues to grow we may see an overthrow of the channel that takes the form of a blow-off top. In either case the market appears close to an inflection point that could shape how markets trade for some time to come.
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S&P 500 Daily Chart (big gap near)
Nasdaq 100 Weekly Log Chart (big inflection point)
Crude oil is on the verge of filling an important gap via the one created in March when the Saudi’s sank oil over the weekend leading into March 9. The massive gap is nearly filled and just above the gap there is both the 2017 and 2018 lows in the 42.60s. This would make any push higher from higher potentially the last one before a meaningful decline may take shape.
Crude Oil (Aug contract) Daily Chart (gap-fill/resistance)
To see all the charts we looked at, check out the video above…
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—Written by Paul Robinson, Market Analyst
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