Another massive overnight ramp job…nothing new there. But, this one has led ES to an important Fib level where it seems to be pausing: the 2.24 extension of the 2007-2009 drop.  Will it matter?

The great thing about ES’ overnight ramp jobs is that they allow SPX to gap right over its own overhead resistance – which in this case is SPX’s 2.24 Fib extension at 2703.62. It’s the Fib that SPX spent from Jan 3, 2018 to Feb 11, 2019 endlessly crisscrossing.

continued for members…

While ES might see  2728 as overhead resistance……it will still mean a gap above 2703 for SPX on the open.  So, we might expect a backtest, but only if TPTB take their feet off the gas.  In 2018-19, the market didn’t have eleventy-zillion dollars of support from the Fed. While CL is currently sidelined, waiting for The Meeting, it’s managing to remain elevated just above the channel bottom. RB is inching higher. Together, they’re supporting the algos – but, not anywhere near as big a way as during the past few days. Ditto for currencies. USDJPY’s rising white channel broke down, but it is holding off any meaningful drop (to backtest its SMA200?) until after SPX is north of 2703.62. EURUSD, tired of its one-way trip lower, is getting a bounce……but, it’s not enough for DXY to have broken trend.

Likewise, VIX is not contributing much to the ramp.  It hasn’t had to.  It has technically broken below the TL from Mar 3. But, only barely so.  Bonds are also edging higher but without enough of a move to matter yet.  Remember, the level that matters for 2s10s is 48 bps.

Taking all the above into account, the strong implication is that SPX will gap above its 2.24 Fib and potentially backtest it after the open.

more shortly…

UPDATE:  10:17 AM

Here’s the backtest of the 2.24.  Bulls need a bounce, bears need it to break down. If we get a breakdown, the downside support levels to watch are the gap close at 2676.85, the purple TL at 2636 and the IH&S neckline backtest at 2609ish.

Stay tuned. UPDATE:  3:25 PM

CL’s fall from grace (EIA report) has added to SPX’s reversal back below its 2.24. VIX hasn’t exactly broken out yet, CL is still above its channel bottom, RB hasn’t broken trend, and USDJPY has yet to break below many of those SMAs, so I’m hesitant to call this the start of something bigger – though it certainly could be.