Mega-cap earnings deliver, yet markets struggle at Rob’s key resistance lines!

Welcome back everyone! It’s Z in for Rob. Hope you’re having a wonderful weekend. We’re going to start off talking about Rob’s SPY levels here. If you’ve been following the videos regularly, you’ll remember from yesterday, July 30th, the insides that were provided were all about the mega caps taking us above key resistance but negative divergences remaining. The thought in the videos from Thursday, July 30th, we may still have some struggles. We still have some balls up in the air but they probably won’t be up in the air for more than a day. Those key levels that Rob provided in his videos earlier in the week 323.11 – that’s still the key area that we’re struggling with today. The mega caps over delivered on top and bottom-like earnings as of last night, Thursday, July 30th and into the open of trade, Friday, July 31st. We’re in a market that looks a little bit stretched. I’m going to take you into that live chart right now.
So, how did we know it was a little stretched? The inside of the day charts depicted much more so than of course the daily candle. Right now we’re well ahead of market close. We have another 3.5 hours until market close. I’m recording this video early as I do have to be away from my desk this afternoon but I wanted to get some insights out to you.

Bottom line is, you have a big, big bar over here that has come down from the open. When we opened up, we opened up into the negative momentum shift from right over here. We continued to see the negative divergence between the highs that were made and the highs from the core and fast trigger. They continue to persist into today’s trade. The core trigger turned light blue and the fast trigger is magenta. TRP sell crossover presented stochastics that have come down from the top. We don’t have anything here that is ultra negative but we do have enough to say that it warrants caution and a potential move into the channel could be in front of us. When we reduce the time frames on the charts and start looking at them with more of a granular lens, you’ll see going from the overnight session where we started to flatline into the cash hour (around 9:15 a.m. ET). At 9:30 a.m. ET, you can see the TRP sell signal fire off over there with a target 1 and target 2 down over here. Throttling happening inside the day. Price making it down to target 2 busting below that momentum shift over here. If price during the day today continues to stay below 3232 on the ES specifically, you’ll look at more potential downside risk. If you put this into perspective, we were overturned all that positivity and came back down to say that maybe the mega caps got a little over their skis.

At this stage in the day, negative signals are still abound. The SPY is below its core and fast speed line. The SPY continues to remain below the key line that Rob provided of 323.11. We’re sitting at 322.40 at this moment and the idea would be protection from downside risk makes more sense. Expectations for the market to continue to market in this key area of resistance remain in play. For the over the weekenders, we don’t have a major support break but we have struggles at resistance with that negative divergence persisting. A lack of good news in front of us. All of the major mega cap stocks have now provided their earnings. We have a very important job’s report coming out next Friday so between now and the beginning of next week, we’re looking at this key resistance structure as an obstacle – an obstacle that has less of a chance to breakout and continue. We’ll keep our mind open. You’ve heard that consistently over the last few weeks. We’ve consistently come back to that area. This is going to be an area of challenge.

Inside the day today, for members of the Active Trader Room a good chunk of the conversation this morning of the trades all had to do with short-side trading from the open. We earmarked for members of the Active Trader Room, all of that positive action from the overnight and that big blast off last night, while it’s below 3263 and if it breaks below 3249 (this is the ES now), there’s more likely some downside risk. The core part of the range that we’re traversing is that 3263. Momentum still keeps us pointing down. We haven’t resolved this downward momentum. We’re looking for resolution of that downward momentum – somewhere between 3222 and 3184 – before we can look at the market more favorably again. Of course if a deal gets done before market hours are over today, we could potentially see a blast off move. But what we see is what we want to trade and we are in a downtrending market that has more vulnerability at this moment in time. When I bring up Rob’s ITP and TRP tools, we are still meandering around the speed lines (slightly below them) and the negative divergence persists. The stochastics are pointed down implying that there may be some downside risk for the SPY into the 320 area or slightly lower.

Hope you’ve enjoyed this video. I’m looking forward to seeing you in videos just like these in next week’s market action. Have a wonderful rest of your day and weekend!

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Bullish earnings push markets above key resistance! But negative divergences remain.